In a recent development, the Finance Committee of the House of Representatives has given the green light to proceed with the licensing process, reigniting the discussion on the necessity of a second stock exchange in Nepal. The debate revolves around one faction advocating for enhancing the flexibility of the existing Nepal Stock Exchange (NEPSE), while another asserts the urgent need to establish a new one. Amidst this, the current government remains undecided on granting permission for a second stock exchange, especially after the abrupt cancellation of the application process.
Various media outlets
have reported persistent efforts by supporters of the new stock exchange to
push for its establishment. The Finance Committee, which directed the Nepal
Securities Board in late October, has also communicated its stance to the
Council of Ministers through the Ministry of Finance. Santosh Chalise, the
committee's chairman and a Member of Parliament from the ruling Nepali Congress,
clarified to BBC News Nepali that no new decision regarding licenses had been
made; they had merely lifted the previous ban. He emphasized that the decision
was free from external pressure or influence, stating, "We are not an
official licensing body. The Cabinet will give permission. Whether to give or
not is in their hands."
Chalise revealed that the committee had sought input from the investment board and experts about the necessity of a new stock exchange before taking any action. However, Swarnim Wagle, an MP and economist from the Rashtriya Swatantra Party, registered a dissenting vote, expressing skepticism about the committee's decision-making process. He hinted at the possibility of a hasty decision with questionable intentions, calling for meaningful discussions about the festival.
While Wagle does not fundamentally disagree with the idea of a second stock exchange for competitive reasons, he questioned the timing and process of the decision. After the regulatory body's call to open a second stock exchange, the Himalayan Stock Exchange, the National Stock Exchange, and the Annapurna Stock Exchange submitted three applications in April. However, the government abruptly halted the selection process midway.
Ramesh Kumar Hamal, the chairman of the Securities Board Sebon, acknowledged the long-standing demand for another stock exchange in Nepal, emphasizing that its arrival would introduce healthy competition. Hamal stressed that, like stock exchanges globally, it should be privately owned while providing protection, guidance, governance, and transparency. He mentioned that despite the Nepal Stock Exchange's commendable performance, investors continue complaining about its limited impact on the country's economy.
Hamal highlighted that the Securities Board had secured the Ministry of Finance's consent when discussions about opening another stock exchange began in 2074 BS (2017 AD). He acknowledged calls for reforming the existing Nepal Stock Exchange but expressed skepticism about significant transformations happening anytime soon.
Addressing concerns about the possibility of a certain business house dominating a new stock exchange, Hamal reassured that regulations ensure 30 percent ownership for the public, preventing any deviation from the rules.
Investors also weighed in on the debate, with some anticipating increased market competitiveness with the arrival of a second stock exchange. Radha Pokharel, the president of the Investors Association, drew parallels with the telecommunications sector, citing increased competition and benefits for consumers after the introduction of private telecom companies. However, there are reports of intense competition and various tactics being employed in the race for the license. As the discussions continue, stakeholders eagerly await further developments in Nepal's financial landscape.
