Parliamentary Committee Mandates Comprehensive Capital Market Overhaul to Strengthen Regulatory Framework and Investor Protection

Kathmandu. The Finance Committee of the House of Representatives has issued a five-point directive to the government and regulatory authorities aimed at addressing critical policy, technical, and governance challenges within Nepal’s capital market. The committee targeted the Ministry of Finance, the Securities Board of Nepal (SEBON), the Nepal Stock Exchange (NEPSE), and CDS & Clearing Limited for comprehensive reforms.

1. Directive to Introduce New Securities Legislation

The committee underscored the necessity of drafting a new Securities Bill to establish clear roles, responsibilities, and accountability mechanisms for regulatory bodies. The Ministry of Finance and SEBON have been instructed to expedite the preparation and parliamentary submission of the legislation.

2. Enhanced Due Diligence for IPOs and Revised Promoter Shareholding Norms

Strict evaluation criteria have been mandated for primary share issuances, prioritizing companies based on capital adequacy, technological capabilities, net worth, and financial performance. Additionally, the committee has called for revisions to mandatory promoter shareholding requirements to enhance market stability.

3. Technology Upgrades and Cybersecurity Enhancement at NEPSE

Recognizing recurring disruptions to NEPSE’s digital platforms that have caused financial losses, the committee has directed immediate infrastructure modernization and implementation of advanced cybersecurity measures. The Ministry of Finance, SEBON, and NEPSE are tasked with accelerating system restructuring and security protocols.

4. Intensified Surveillance Against Market Manipulation

The committee has reinforced strict monitoring of secondary market activities, specifically targeting collusive trading, artificial price inflation, supply manipulation, and speculative schemes like pump-and-dump operations. Enforcement agencies have been directed to promptly identify and penalize misconduct.

5. Urgent Appointment of Leadership at Key Institutions

The committee has ordered the immediate filling of vacant CEO positions at NEPSE and CDS & Clearing Limited to ensure stable governance. The Ministry of Finance is responsible for accelerating the recruitment process for these critical roles.

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