Gopal Tiwari

Kathmandu, July 3:

Despite delay in taking stock of Nepali capital market for its effective modernisation, a three-member US-mission led by Mike Mulligan is visiting Nepal from July 4 to finalise the working mechanism to strengthen the stock market and its future mutualisation. The government is also all set to bring Securities Ordinance-2061 to implement the project effectively. According to a source at the market, the project had started its preliminary work back in October 2003.

“However, there was a delay in expediting the work due to ‘political’ and ‘technical’ reasons. The project’s total cost — estimated at $1.63 million provided by Asian Development Bank under the government’s Corporate and Financial Governance (CFG) — is to be used for reforming the securities market,” the source claimed.

Ministry of finance (MoF) is the executing agency of the project. Capital market sources disclosed that the major components of the project are institutional strengthening of Securities Board (SEBO), privatisation of Nepal Stock Exchange (Nepse), operation of Central Depository System (CDS) like other countries and capacity building of the company register’s office. Though the stock market is known as the barometer of the economy, it has not worked effectively in Nepal due to lack of transparency and weak corporate governance. Giving autonomy to regulatory institution like SEBO and other organs surrounding the stock market is always getting mired in difficulties. To implement the project, the MoF has formed a Project Coordination and Monitoring Unit to be represented by the Securities Board, MoF, Nepal Stock Exchange and professionals.

In 2003, the government

has selected the Aries Group Ltd of USA for the implementation of the stock market project and the inception work was done from October 5-27 with a view to modernise the stock market operations. However, the works got delayed due to bureaucratic anomalies and political instability. The major focus of the project is in developing the rules and enhancing the capacity of SEBO to make it more autonomous and strong to implement rules and regulations, said the source. Other rules include public disclosure rules, rule-making procedures for the market perfections, rules for public issues and offerings, rules on securities businesspersons, rules for takeovers and mergers and insider trading. It may be recalled that Bank and Financial Ordinance has already prescribed the provision for the bank and financial institutions to comply with the securities legislation in the course of issuing securities. The proposed Ordinance enables Securities Board to make its governing structure broad and thereby helping it to be self-sustainable regulator.