SEBON Has Created a Separate SME Platform Index & Placed Low Capital Companies On It; Now NEPSE To Have 2 Index

The "Investors Interaction Program" on the subject of Capital Market Improvement was held on March 29, 2023, at 3 PM, at the Radisson Hotel, and was organized by Nepal Investors Forum, Nepal Pujibazar Laganikarta Sangh, and Share Laganikarta Sangh.

The program's keynote speakers included Mr. Ramesh Kumar Hamal, chairman of SEBON, Mr. Tulsi Ram Dhakal, Mr. Chote Lal Rauniyar, Mr. Tara Phullel, and Ms. Radha Pokharel.

Ramesh Hamal, Chairman of the Securities Board of Nepal, has discussed different concerns affecting the capital market as well as solutions to improve the market environment on the same engagement program.

The creation of new stock exchanges, commodity markets, and the granting of broker licenses are currently of concern of every investors. In this regard, Hamal has emphasized that, should the court rule in favor of granting a broker license, the license will be granted even if a new regulation is put into place. He claimed that granting a brokerage firm license is not a simple operation and does not follow a quota system in which all applicants are granted licenses. More time is required because there are specific rules that must be followed. According to Hamal, if the applicants have submitted an application for a license and have met all of the prerequisites, a license will be issued to them sooner or later.

In the seven months prior, one company applied for a stock dealer license, while 45 companies applied for stock broker licenses. Yet, all of the procedures had been put on hold following the Supreme Court's directive. Seven months later, the suspension of the broker license has resulted in the freezing of a capital of around Rs. 12 Arba.

On the other hand, SEBON has created a draft of the rules necessary for the SME (Small and Medium-Sized Enterprises) platform to operate on the Nepal Stock Exchange (NEPSE). The draft will be made available for verifications on Thursday, March 30, 2023, according to Mr. Ramesh Hamal.

He stated that after the document is created, the board will approve it after considering the views of the pertinent parties, and the draft would then be transmitted, via the Ministry of Finance, to the Council of Ministers for approval. He asserted that the NEPSE Regulation's SME platform will be online in the next seven weeks.

For a very long time, the board had wanted to run a distinct SME platform for trading shares of small and medium-sized businesses. The board also gave NEPSE the go-ahead to make the necessary preparations. However, following NEPSE's statement that the SME platform cannot be used without a clear legal foundation, it will be incorporated into the rules by enacting legal changes. In order to transact business, SEBON has created a separate SME platform index and placed low capital companies on it. Thus, two indexes will shortly be generated on NEPSE, one of which will be the standard index reflecting the 13 sectors and the other of which will be a separate index for SME.