Group seeks stock, derivatives exchange licence

A group of professionals has applied for licence to operate a stock and derivatives exchange.
Nepal Securities and Derivatives Exchange Ltd -- promoted by Vibor Bikas Bank CEO Ajay Ghimire, Ace Development Bank CEO and MD Siddhant Raj Pandey, Himalayan General Insurance CEO Mahendra Krishna Shrestha, DCBL president and CEO Sudhir Khatri and Clean Energy Development Bank CEO Manoj Goel -- has applied for a licence to operate a securities and derivatives exchange.
If it gets the nod, Nepal Securities and Derivatives Exchange Ltd -- with a paid up capital of Rs 250 million and Rs 50 million authorised capital -- will be the first derivatives exchange in Nepal.
"As the most professional and experienced group in the secondary market, we have applied to the board," said Ace Development Bank CEO and MD Pandey.
Meanwhile, this is the third application registered with the Securities Board of Nepal (Sebon), the regulator of the capital market, asking for a licence to operate the secondary market. Sebon has received two applications two months ago for licence to operate a stock exchange. Kathmandu Stock Exchange promoted by a group of professionals including Kist Bank Ltd and IME Finance and National Stock Exchange promoted by other financial institutions and non-financial institutions including ICFC Financial Insitituion, Prudential Insurance and Surya Insurance have applied for licence to operate stock exchanges.
However, the board suggested they merge and become one to be more competent and professional.
They have merged and again applied, according to Kamal Gnawali, managing director of Kist Bank Ltd -- the youngest commercial bank -- and are waiting for Sebon's decision on their application.
"The board will soon form a committee and set criteria to award licence for the stock exchanges," said Sebon director Niraj Giri. Sebon will issue licence according to the Securities Regulation-2065
For nearly two decades, Nepal has had one stock exchange -- Nepal Stock Exchange (Nepse) that ruled the capital market as the sole secondary market. But the increasing number of listed companies and investors, and the regulation have given rise to competitors.
The market size has increased seven-fold and the number of investors has crossed 1.5 million. "The new stock exchanges will promote competition in the market," said Shankar Man Singh, managing director of the Nepse -- the government undertaking that successive governments have been promising to privatise.
Though Nepse has been automated it still needs to boost its competence and develop a central depository system (CDS) for smooth transactions. The private stock exchanges' entry into the capital market will help Nepse build up its core competence in technology and professional manpower as well.