SEBON Receives Green Light to Resume Broker License Distribution Process Following Finance Committee Meeting

In a significant development, the Securities Board of Nepal (SEBON) has been granted permission to resume the distribution process of broker licenses. This decision was reached during a Finance Committee meeting held today, marking a positive turn of events for the capital market.

The Finance Committee has issued a press release to notify the same.

See press release here: 

Earlier, on Jestha 29, 2080, the Finance Committee had imposed a temporary and indefinite ban on all ongoing licensing procedures for new brokerage licenses. However, during today's meeting, all committee members unanimously agreed that it was essential to reopen the license distribution process.

SEBON Chairman Ramesh Kumar Hamal addressed the committee and reiterated his commitment to meeting investors' demands over the past 15 years. He highlighted that the long-standing requests for an open broker system and licenses for subsidiary companies of banks have now been fulfilled. This marks a significant milestone for Nepal's capital market, as it is the first time three types of broker services have received official licenses.

Chairman Hamal also cited the findings of the Auditor General's report, revealing that during the previous distribution of broker licenses, state protection was provided to 50 brokers who managed to accumulate a substantial 70% of the overall profits. Furthermore, he emphasized that the top 10 brokers accounted for an astonishing 88% of the total income, as stated in the same report.

Addressing the meeting, SEBON Chairman Hamal, in line with his past assurance to the New Stock Brokers Association Nepal, advocated that the Finance Committee's decision must be rectified, as it is in the best interest of the capital market.

Former Minister of Finance and Deputy Prime Minister Bishnu Prasad Paudel, during the meeting, expressed his agreement with the sentiments shared by other officials. Paudel emphasized the positive stance taken in the meeting regarding the resumption of new broker licensing procedures and stated, "All the concerned MPs and officials in the meeting have expressed a similar stance on the matter. I too share the same opinion."

Paudel, who is a member of the Finance Committee, further emphasized the importance of transparency and fairness in the criteria and guidelines set by SEBON for awarding new broker licenses. He highlighted the need for a level playing field and emphasized that the evaluation of competitiveness among applicants should be a crucial aspect of the licensing process. Paudel stressed that all applicants should be evaluated based on their merits and adherence to the established guidelines, ensuring fairness and equal opportunities for all interested parties.He clarified that the evaluation of whether an applicant company has met the prescribed guidelines falls solely under the responsibility of SEBON, not the Finance Committee.

Referring to the Supreme Court's decision and the temporary halt on the distribution of new broker licenses by the Finance Committee, Paudel reassured that the Committee holds the highest regard for the Supreme Court. He clarified that the Committee's intention was never to oppose the Court's decision, but rather to prioritize the establishment of a fair and transparent process.

Finally, Vice-Chairman of the major opposition party CPN UML, Paudel, asserted the need for prompt resumption of procedures for new brokerage licensing.

Former Finance Minister Gyanendra Bahadur Karki, known for his previous roles in various important ministerial portfolios such as the Ministry for Law, Justice and Parliamentary Affairs of Nepal and the Ministry for Information and Communications, shared his perspective on the process of distributing new broker licenses in today's meeting.

According to Karki, the initiation of the new broker license distribution process comes after a long period of approximately 16 years since the quota system was abolished in favor of the Open Entry-Open Exit System. This system evaluates the capital, experience, and qualifications of interested companies.

Karki emphasized that SEBON Chairman Hamal holds the responsibility of ensuring a fair distribution of brokerage licenses and should be accountable for the process. He further mentioned that the Supreme Court has already rendered its verdict on the matter. Therefore, the Finance Committee should not oppose the Court's decision and instead pave the way for SEBON to carry out all necessary procedures for distributing new brokerage licenses, as stated by Nepali Congress Leader Karki.

"During the meeting, there was a lively discussion on the subject. Despite the substantial experience of the committee members, they need to consider the current economic circumstances while making decisions."

Expressing his optimism, Karki stated that he believes SEBON will proceed while considering the benefits that new brokers can bring and how they can contribute to strengthening the struggling economy.

During the meeting of the Finance Committee, Rana Kumari Balampaki Magar, a committee member, expressed her concerns and opinions regarding the distribution of new broker licenses.

Magar revealed that the committee had received a report on securities during their meeting on Jestha 29. However, due to time constraints, they were unable to thoroughly study the matter. She suggested that if SEBON Chairman had provided a briefing on that day, the subsequent one-week delay in the due processes of new brokerage licenses could have been avoided.

The CPN UML leader Magar asserted that the process of awarding new brokerage licenses that has eventually proceeded after 16 years would contribute to employment generation and help prevent Nepali citizens from migrating abroad. In light of these potential benefits, she advocated for the process to proceed without any further delays.

Magar also highlighted a lack of direct communication and timely information dissemination within the committee. She expressed her dissatisfaction with being informed about decisions only after they had been made, emphasizing that it was uncomfortable to learn about important matters through second-hand sources. In order to ensure effective decision-making, Magar stressed the importance of reaching collective consensus within the Finance Committee.

Similarly, all members of the committee were in unanimous agreement that the license process should be reopened.

The Finance Committee under the House of Representatives (HoR) comprises of 24 Member of Parliaments (MPs) with different political affiliation.

See list here:

Earlier, a meeting of the Finance Committee meeting had been scheduled for Tuesday, Ashad 05, 2080, at 8:00 am in the Secretariat premises of the Federal Parliament. 

(Reporting and Compilation by Aashish Chaudhary)