Kathmandu. Niraj Giri, former executive director of the Securities Board of Nepal (SEBON), said that legal reforms and use of modern technology were inevitable for the stability and development of capital market. Speaking at a dialogue programme on ‘Nepal’s Capital Market: Basis of Economic Investment’ organized by the Nepali Congress, Minister Giri said this while speaking at a dialogue on ‘Nepal’s Capital Market: Basis of Economic Investment’. 

He said that the main challenge for the market is that there is no provision for financial technology (fintech) in the current law.Giri argues that it is wrong to put pressure on the government and regulatory bodies to increase the market instead of developing the basic elements for the growth of the market. 

Stating that there is a lack of real-time monitoring (instantaneously supervision) in the market, he warned of huge economic risks if the technology is not used.  Citing the example of the regulatory bodies being unaware of the recent creation of liabilities worth Rs 3 billion of a broker, he stressed the need for a technology-based monitoring system instead of physical supervision.

He suggested that a new Securities Act should be brought for the reform of and in this Act there should be a clear distinction between the operation of the board and the functions related to the transactions of the market. 

Stating that restructuring of Nepal Stock Exchange (NEPSE) and CDS and Clearing Limited should be restructured, he said that it would be better to make the existing entity of international standard than adding a new stock exchange in a small economy like Nepal.

Giri said that it has been too late to introduce new financial instruments and and Non-Resident Nepalese (NRN) in the capital market.According to him, there should be high-level coordination between the Ministry of Finance, Nepal Rastra Bank and the Securities Board of Nepal to open the market for FDI and Foreign Direct Investment (FDI). He also expressed the belief that the market would be more dynamic if NEPSE brought new equipment as a profit-making organization.

Giri has questioned the autonomy of the board and the provisions of the existing Securities Act. Former executive director Giri said although the Securities Board of Nepal is an autonomous body, in practice it has to depend on the Ministry of Finance even for general administrative work. “Not only brokers, but also merchant bankers, dealers and issue managers have an equal role for the balanced development of the capital market, but there has not been enough legal clarity in the past,” he said. In addition, he argues that the market is troubled by the lack of a systematic system for disseminating price-sensitive information such as dividend announcements, leadership changes or the exit of key promoters.

Similarly, discussing the legal history of the capital market, Giri said,The draft of a new act has been prepared with the support of the Asian Development Bank (ADB) from 2057 BS to replace the 2040 Act. He said it was unfortunate that the Securities Act promulgated in 2063 BS could not be revised even after two decades. He concluded that in the absence of timely laws, regulators, investors and the government are all in the process of learning and the provision of effective punishment is also weak.