11 Instructions of Finance Minister Sharma to Newly appointed heads of SEBON and NEPSE
The Ministry of Finance welcomed the newly appointed heads of the Securities Board of Nepal (SEBON) and Nepal Stock Exchange Limited (NEPSE) and gave various instructions for the improvement of the capital market. The Ministry of Finance had appointed Ramesh Hamal as the Chairman of the Board and Krishna Bahadur Karki as the Chief Executive Officer (CEO) of NEPSE through open competition.
Speaking at a program organized at the reception of Chairman Hamal and CEO Karki on Thursday, Finance Minister Janardan Sharma has given 11-point instructions to both the bodies for the betterment of the capital market. The new leadership, elected through open competition, has been instructed not to work under any pressure or influence.
Minister Sharma directed the newly appointed heads to create an environment where the money required for investment in production and infrastructure would come from the capital market. He clarified that new leadership has been elected in both the bodies with the main objective of resolving the problems of the capital market and protecting the investment of the public.
On the occasion, Finance Minister Sharma said that the money invested in the capital market should be used for prominent projects. "People's money has come to the capital market. Now this money can be used for capital formation. You (SEBON and NEPSE officials) need to focus on investing in big projects," he said. "The capital market needs to focus on how to manage investment in projects of national importance."
Sharma also urged not to engage in politics in the capital market. "We should not do politics in the capital market. It should be allowed to run autonomously." He said, "The market should not be manipulated on the opinion, whim, or direction of some minister."
Minister Sharma reminded that he has given priority to solving the problems of the capital market as soon as he took office, adding that new leadership has been selected in the Securities Board and Nepal Stock Exchange while initiating the reform work. He expressed confidence that the new leadership would improve the country's capital market and take it to a new place.
He directed that illicit activities such as insider trading, pump and dump schemes, and circular trading should not be seen in the capital market in the coming days. "Until I came to the ministry, there was no acknowledgment of illegal acts like circular trading, pump and dump schemes, and insider trading," Sharma stated. "since I came here, we have talked about this malpractice and it has been investigated and brought under control. Therefore, even in the days to come, such illicit activities will not be allowed."
He said that small investors should be protected and allowed to enter the capital market, OTC market should be given priority, coordination between NEPSE and the Board should be made, companies should be facilitated to be listed in NEPSE, broker capacity should be increased, and software capacity should be developed. Sharma also gave instructions to introduce additional services through the TMS.
Speaking on the occasion, Finance Secretary Madhu Kumar Marasini said that he believed that the new leadership would lead the capital market in a positive direction. Similarly, Revenue Secretary Krishna Hari Puskar said that the share market was improving a lot and the work was being done in a transparent manner under the direction of the Ministry of Finance.
The newly appointed chairman of SEBON, Ramesh Hamal, said that he would do a lot of work in the field of financial literacy for investors. He said that due to lack of literacy, investors seem to be following rumors or involved in producing rumors. He also said that there was a lack of big market makers.
Krishna Bahadur Karki, the newly appointed CEO of NEPSE, expressed his commitment to move ahead ensuring there will be no complaints from investors.
11 key directives given by Finance Minister Janardan Sharma
1) To take the capital market of Nepal forward by making the capital market investor-friendly amidst the epidemic of Covid-19 by studying how the capital market has been operated in the neighboring countries India, China, Pakistan, Bangladesh, USA, and the UK.
2) To study how the capital market can provide the highest returns to investors and manage necessary investments in projects of national importance. To make arrangements for raising capital for large infrastructure, production, and capital formation.
3) To improve the TMS currently in operation.
4) The way should be open for small companies and startup companies to enter the capital market. In particular, by developing the SME and OTC markets, the market for small companies should be developed on the basis of venture capital.
5) To make arrangements for the development of the OTC market and trading of shares of various public limited companies which have not been listed and are not eligible for IPO. To improve the system so that intraday trading and short selling can be done in the coming days.
6) To start automated action. Arrangements will be made for all investors across the country to buy shares that could not be sold at the initial auction.
7) To develop a 'sub-broker' model, derivatives tools trading, and commodities exchange.
8) To prepare a new scientifically constructed indicator representing the economy such as the BSE SENSEX of India, Dow Jones and NASDAQ of the US, etc. To make the market indicator more structured by making a large-cap index, mid-cap index, and small-cap index on the basis of market cap.
9) To implement book building system to bring productive companies to the share market, Introduce index fund and credit fund.
10) Implement margin lending to the brokers. To advance the margin lending process through broker companies and merchant banking institutions.
11) To eliminate circular trading, pump and dump schemes, and insider trading. To establish public awareness about the capital market, capital market literacy, training centers.