The Securities and Exchange Board of Nepal (SEBON) has initiated the process of granting a license for a new stock exchange. A committee, led by a SEBON board member, has been tasked with moving the process forward, according to a board director.

In December last year, the Council of Ministers decided to implement recommendations made by a committee led by Chintamani Shiwakoti, a Nepal Rastra Bank board member and former deputy governor. The committee had recommended that approval for a new stock exchange could be granted after mid-January 2024. Following Santosh Narayan Shrestha’s appointment as SEBON chairman in late November, the government decided to implement these recommendations.

A recent decision of SEBON led to the formation of an action plan committee to facilitate the licensing process. "Last week’s board meeting authorized the pre-existing committee to implement the government’s decision," a board member told New Business Age. However, no specific deadline has been set for execution.

The issue of licensing a new stock exchange had previously been mired in controversy due to its connection with the SEBON chairman appointment process. Currently, three business groups have applied for the license.

Three companies—Himalayan Stock Exchange, National Stock Exchange of Nepal, and Annapurna Stock Exchange Limited—submitted applications.

The new stock exchange will require a paid-up capital of Rs 3 billion, with promoters holding 70% of the capital and the remaining 30% allocated to the public. Additionally, the exchange must issue 30% of its shares to the public within two years of commencing operations.

NEPSE remains the sole stock exchange in Nepal at present. Efforts to introduce an alternative began on September 18, 2022, when the Securities Board of Nepal (SEBON) opened applications for a new stock exchange with a 45-day deadline. However, delays ensued after the Supreme Court issued an interim order on October 21, 2022, pausing the application process. The court later dismissed the writ petition against the licensing process on March 20, 2023, enabling SEBON to reopen applications on April 13, 2023.

With appointment of SEBON chairman, the regulatory body has now prioritized the licensing process. According to a senior official, one of the three applicants will be awarded the license based on eligibility criteria.