SEBON Proposes New Benchmark Index Based on Free-Float Shares

The Securities Board of Nepal (SEBON) has proposed restructuring Nepal’s securities market benchmark index by introducing a new NEPSE Benchmark Index based on the market capitalization of tradable free-float shares.

The proposal has been prepared in line with Point 6 of the Capital Market Strengthening and Revival Action Plan, 2083, issued by the Ministry of Finance on Bhadra 29, 2083. The action plan calls for retaining the NEPSE Index as an All Equity Index and introducing a new fundamental benchmark index for the securities market by the end of Mangsir 2083.

According to SEBON, the existing NEPSE Index calculates market capitalization by including shares that are not available for daily trading, including locked-in promoter shares.

Although government-owned shares and other locked-in shares are included in the total market capitalization used for index calculation, such shares are not necessarily available for trading in the secondary market. As a result, the existing index may not fully reflect actual market conditions and the investable portion of the market.

The proposed restructuring seeks to address this concern and make the market benchmark more representative of the shares actually available for trading.

Under the proposed framework, the existing NEPSE Index will be retained but restructured as the NEPSE All Equity Index, which will serve as a broad indicator measuring the overall performance of equity shares.

Alongside the All Equity Index, SEBON has proposed developing a new NEPSE Benchmark Index based on the market capitalization of tradable free-float shares.

The new benchmark will distinguish between promoter, government-owned and locked-in shares and shares that are freely available for trading. A specified free-float factor will then be applied based on the proportion of shares available for trading.

SEBON expects the proposed free-float-based benchmark to provide a more realistic representation of Nepal’s securities market by focusing on the portion of equity that investors can actually trade.

The restructuring is also expected to create a stronger foundation for the development of modern financial instruments, including index funds, exchange-traded funds (ETFs) and derivatives.

A free-float-based benchmark could also improve the comparability and usefulness of the index for institutional investors and other market participants by reducing the influence of shares that are not readily available in the secondary market.

SEBON has made the Working Paper on Restructuring the Benchmark Index in the Securities Market, 2083 available for public consultation.

The regulator has requested stakeholders and other concerned parties to submit their suggestions and feedback on the proposed framework by Kartik 15, 2083.

SEBON said the consultation process would help incorporate views from market participants and other stakeholders before the proposed benchmark index structure is finalized and implemented.

https://sebon.gov.np/uploads/2026/10/16/hV5HjyDIdFhqR3doIkVoq0uJ8rBqDsYnq64tHEA6.pdf