On Sunday, Finance Minister Dr. Swarnim Wagle engaged in an essential dialogue with representatives from the Stock Brokers’ Association of Nepal (SBAN) to tackle the recent unexpected downturn in Nepal’s stock market and investigate strategies for its stabilization and enhancement.
Held at the Ministry of Finance, the meeting commenced at 9:45 am and continued for nearly 30 minutes, wrapping up at 10:15 am. Throughout the gathering, SBAN representatives illuminated several hurdles confronting the securities market, including operational limitations for brokers, policy shortcomings, and the necessity to strengthen investor trust.
The Finance Ministry reported that the conversation centered around approaches to enrich the capital market, guarantee enhanced transparency, and foster a more investor-friendly landscape. Post-meeting, brokers conveyed hope that these initiatives could aid in reinstating market stability.
Key highlights from the dialogue included:
1. Execution of Capital Market Reform Recommendations: Brokers pressed for the swift implementation of recommendations proposed by the Capital Market Reform Taskforce to fortify the sector.
2. Streamlining Market Access for Banks and Financial Institutions: Brokers called for simplified protocols enabling institutions to enter and exit the capital market seamlessly, as existing regulations limit the sale of purchased shares to a six-month retention period.
3. Facilitation for Nepalese Citizens Abroad: The brokers stressed the necessity for allowing Nepali citizens residing overseas to trade in the secondary market more effortlessly.
4. Clarity on Capital Gains Tax: It was proposed that the government delineate capital gains tax as a conclusive tax and establish processes for easier investment of government funds into capital market instruments, enhancing confidence among smaller investors.
5. Enhancement in Securities Settlement: Brokers voiced concerns regarding delayed settlements attributable to the market’s limited capacity to guarantee securities transfers, advocating for the rapid establishment of an auction market to protect investors from losses.
6. Activation of Settlement Guarantee Fund: Despite the creation of regulations in 2018 and operational procedures in 2022, the Settlement Guarantee Fund has yet to be effectively enacted. Brokers called on regulatory authorities to issue necessary directives for prompt enforcement.
The SBAN also underlined the significance of advancing the capital market’s transparency and tech-driven aspects, while compelling the government to assume a protective role to bolster investor confidence.
This meeting occurred amid a 105-point dip in the stock market on Sunday, which raised alarms among secondary market investors. Finance Minister Wagle recognized these concerns and stressed the government’s dedication to addressing them.
Currently, Nepal’s capital market includes around 7.6 million investors and 92 licensed brokers. With a new government now in office, both investors and brokers remain hopeful that recent initiatives and policy backing will enhance market performance and restore faith.
This high-level discussion represents the government’s proactive stance in confronting market instability while establishing a foundation for enduring reforms in Nepal’s capital market.
