Sebon awaits govt nod to Mutual Fund Regulation

Kathmandu, March 30:

Securities Board of Nepal (Sebon) is waiting for the Finance Ministry’s final go-ahead to the Mutual Fund Regulation (MFR), said Niraj Giri, director at the Securities Board of Nepal, the regulatory authority of the capital market.

The ministry has formed a three-man team to finalise the regulation that is expected to lure small investors to the capital market.

Even after more than 16 years of securities trading, Nepal lacks a regulation to manage mutual funds.

After suggestions from Nepal Rastra Bank (NRB) and Nepal Bankers’ Association (NBA), Sebon forwarded the draft regulation to the ministry.

Mutual fund — with a face value of Rs 10 per unit — is the most suitable investment for people as it offers a chance to invest in a diversified, professionally managed basket of securities at relatively low cost.

The regulation is expected to fuel the capital market as many commercial banks have shown keen interest in it. It will also create institutional investors, something that the domestic capital market lacks.

Despite an absence of the regulation, NIDC Capital Markets Ltd and Citizen Investment Trust (CIT) had issued NCM mutual fund and CIT unit trust.

The regulation will have all the tools a transparent and professional fund must have. Besides the sponsors that issue mutual funds, the draft envisions an Asset Management Company (AMC) to manage the fund, a trustee to act as a watchdog, a custodian and a depositor, all of whom will have to get separate licences from Sebon.