Dr. Bhatt Calls CCP Essential as SEBON Moves Toward Stronger Market Regulation

Securities Board of Nepal (SEBON) Chairman Dr. Gopal Prasad Bhatt has said the board has adopted a new risk and governance based regulatory strategy to make the capital market safer and more organized.

Speaking at a meeting of the House of Representatives’ Finance Committee today at 8:30 am, Bhatt said SEBON is working on institutional and system level reforms to modernize the capital market. He said a Central Counterparty (CCP) has become necessary to ensure the settlement of share and derivative transactions in the secondary market.

According to Bhatt, a separate CCP could be established under Nepal Stock Exchange (NEPSE), or Central Depository and Settlement Company (CDSC) could be given the responsibility after strengthening its infrastructure and capacity. He said SEBON is currently studying and preparing for the development of CDSC’s capacity for this purpose.

Bhatt said the board is also introducing policy reforms based on four key principles to support the stability of the economy and capital market. Under its risk based supervision approach, areas carrying higher risks will face stricter regulation and supervision in line with international practices.

He further said only companies with strong governance should be allowed to raise funds from the capital market, as they mobilize public money. Referring to Karnali Development Bank, Bhatt said SEBON is coordinating with Nepal Rastra Bank to ensure that risks faced by depositors are not transferred to shareholders.