SEBON advances process for new stock exchange license amid controversy

KATHMANDU: The Securities Board of Nepal (SEBON) has taken a significant step forward in the process of issuing licenses for a new stock exchange by forming a study committee. This move comes amid ongoing political and procedural controversies surrounding the licensing process.

The decision to form the committee was made during a meeting of SEBON’s board of directors held on Thursday, chaired by Vinod Kumar Bhattarai , Joint Secretary at the Ministry of Law. Notably, Tulsi Prasad Ghimire , Executive Director of Nepal Rastra Bank (NRB), and Gokarna Awasthi , General Secretary of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), were absent from the meeting.

According to sources, the newly formed committee has been tasked with studying three key documents:

A decision by the Cabinet of Ministers .

A letter from the Ministry of Finance .

A report submitted by former NRB Deputy Governor Chintamani Shivakoti .

“The Thursday meeting assigned the committee to study these three topics,” a source revealed. “However, no discussions took place regarding the numbering or prioritization of companies that have applied for the new stock exchange license.”

The committee, led by Bhattarai, will first develop a work plan based on its mandate and present it to SEBON. Once finalized, this plan will pave the way for advancing the process of issuing licenses for the new stock exchange.

Shivakoti’s Report and Its Implications

Shivakoti’s report also addresses the restructuring of the existing Nepal Stock Exchange (NEPSE) . Given the importance of this issue, SEBON has mandated the committee to thoroughly review it. “Since the restructuring of NEPSE is closely linked to the issuance of a new stock exchange license, the process may take longer than anticipated,” the source explained.

The board meeting held on Magh 15 did not reach any decisions regarding the new stock exchange. While SEBON Chairman Santosh Narayan Shrestha informed the board about the letter from the Ministry of Finance, other board members remained silent.

During the previous meeting, Shrestha had proposed forming a study committee, but the lack of consensus among board members delayed the decision. However, the Thursday meeting unanimously agreed to establish the committee.

Political Controversies and Resistance

The issue of issuing a new stock exchange license has become highly politicized, with some board members reluctant to participate in the process. “Professionals fear being dragged into politically contentious issues, as they may face scrutiny from bodies like the Commission for the Investigation of Abuse of Authority,” a source noted. “Some board members are unwilling to get involved in the new stock exchange licensing process.”

Former Prime Minister and leader of the main opposition party, Pushpa Kamal Dahal ‘Prachanda’ , criticized the government’s approach during a parliamentary session on Thursday. He accused the government of attempting to bypass proper procedures and called for the cancellation of the current process.

“I say this openly: just as telecommunications frequencies are state property, so too should the license for a new stock exchange be treated as a national asset. If it must be issued, it should not be done through commissions but through open competition, with bids evaluated transparently. The current illegal process must be scrapped,” Prachanda stated.

His remarks further complicated an already contentious issue, highlighting the deep divisions over how the licensing process should proceed.

Timeline of the Licensing Process

The application process for a new stock exchange license was first initiated in Ashoj 2079 under then-SEBON Chairman Ramesh Kumar Hamal . Three entities—Himalayan Stock Exchange , National Stock Exchange , and Annapurna Stock Exchange —submitted their applications. However, the process was temporarily halted following an interim order from the Supreme Court .

After the court dismissed the writ petition, SEBON resumed the process in Chaitra 2079 by forming an evaluation committee. However, the Council of Ministers intervened in Baishakh 2080 , ordering SEBON to halt the process. Similarly, the Parliamentary Finance Committee directed the Ministry of Finance and SEBON to suspend the process in Jestha 2080 .

Despite these setbacks, the same parliamentary committee reversed its stance in Kartik 2080 , allowing the process to move forward. Hamal reportedly lobbied political leaders to revive the process but failed after his term ended on Poush 20, 2080 .

Formation of Shivakoti-Led Committee

In Poush 2080 , then-Prime Minister Prachanda formed a study committee under the leadership of former NRB Deputy Governor Chintamani Shivakoti to assess the necessity of a new stock exchange. The committee submitted its report with two options, but Prachanda shelved the matter after receiving the report.

Following the change in government, current Prime Minister KP Sharma Oli decided in early Poush to resume the licensing process. To implement this decision, the Ministry of Finance sent a letter to SEBON on Magh 1, 2080 .

After receiving the letter from Finance Minister Bishnu Poudel , SEBON Chairman Shrestha consulted stakeholders about the licensing process. During the Maoist-led government, then-Prime Minister Prachanda attempted to resolve the dispute by mediating between two groups:

Deepak Bhatt , representing the Himalayan Stock Group.
Upendra Mahato , founder-chairman of the Non-Resident Nepali Association, associated with the National Stock Exchange.

However, these negotiations failed to produce a resolution, further complicating the issue. The controversy surrounding the new stock exchange license has now spilled over into politics, overshadowing what should have been a purely business-oriented decision.