Commodities market issues : Regulation likely before Tihar

KATHMANDU, NOV 06 -

The government is planning to bring a regulation for the commodities market before Tihar. The draft regulation, designed to regulate the commodities market based on the study carried out by the Securities Board of Nepal (Sebon), is currently at the Law Ministry.

Baikuntha Aryal, joing secretary at the Finance Ministry, said chances of the regulation coming before Tihar ‘are high’. “All required provisions have been included in the draft which is currently at Law Ministry,” said Aryal. “After giving it a final touch, the draft will be sent to the Cabinet for endorsement.”

Following complains about commodities exchanges cheating investors, the government moved to devise the regulation to streamline the sector.

The Sebon study had pointed out lack of transparency at exchanges, high probability of capital flight and high chances of investors facing losses. “We have presented the study report to officials of the High Level Financial Sector Coordination Committee,” said Sebon Chairman Babu Ram Shrestha.

Although the Sebon study had revealed that investors were being cheated by the exchanges, the government has not taken any initiative to bring them to book.

The board, however, has said the upcoming regulation will have a provision that will enable investors to file complaints about cheating cases that occurred even before the enforcement of the regulation. “In the draft, we have proposed addressing past cheating cases,” said Shrestha.

He, however, said the Sebon study was carried out to support policymaking and that it should not be taken as an investigation. “The study report was given final touch with consultation with international consultations. We will further streamline it,” added Shrestha.

The proposed regulation talks about increasing the paid-up capital requirement for commodities exchanges.

On the government’s plan to authorise Sebon to regulate the commodities market , officials said regulating the commodities market would be a herculean task without upgrading the capacity and infrastructure of Sebon. The board lacks technology and knowledgeable human resource. There are currently six commodities exchanges in operation in the country and three other have recently received license.

Speculative trading of commodities like precious and industrial metals, petroleum products and agricultural goods, among others, has been the major highlight of exchanges. All these commodities are not produced in the domestic market. Economists say if the goods produced in the domestic market are traded, the country will benefit from such a market.

Source: The Kathmandu Post