Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: A high-level committee tasked with studying the feasibility of allowing multiple organized institutions to operate securities markets in Nepal has released its report, advocating for the establishment of a second stock exchange to break the monopoly of the Nepal Stock Exchange (NEPSE).
Led by former Deputy Governor Chintamani Shivakoti, the three-member committee submitted its findings to the Ministry of Finance on April 16, 2025, highlighting the limitations of the current single-exchange system in meeting market demands. The report emphasizes the necessity of a new stock exchange to foster a competitive and organized capital market.
“To develop a competitive market, it has become imperative to establish a second stock exchange with private sector participation,” the report states. It notes that NEPSE, operating under government ownership for decades, has failed to deliver satisfactory improvements in trading efficiency, technological modernization, investor access, and institutional participation.
The committee also calls for a major overhaul of NEPSE’s structure, recommending a reconstituted board with a majority of experts and the issuance of at least 30% of its shares to the public through an initial public offering (IPO). It further suggests that only institutions prepared to invest significantly in technological upgrades should be granted licenses to operate securities markets.
The proposed second stock exchange is expected to expand market reach, foster competition, introduce new financial instruments and services, and modernize Nepal’s capital market. The report underscores that alternative exchanges are essential for mobilizing capital in developing economies like Nepal.
A privately operated exchange, licensed by the Securities Board of Nepal (SEBON), could enhance nationwide trading, provide opportunities for new brokers, encourage the establishment of a central depository company, develop markets for modern instruments like mutual funds and derivatives, and boost government revenue.
Citing nearly a dozen prior studies, including reports from 2017, 2018, and 2020, the committee reinforces that a single-market system is inadequate for Nepal’s growing capital market. These earlier reports similarly highlighted the need for NEPSE reforms and an alternative exchange.
To support market expansion, accelerate transactions, and provide investors with more options, the committee strongly recommends granting a license for a second stock exchange. The move is seen as a critical step to strengthen Nepal’s capital market and align it with the needs of a dynamic economy.
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