KATHMANDU, SEP 16 - 2012
The Securities Board of Nepal (Sebon) is discussing multiple options to regulate the commodities market given the current Securities Act has no such provisions.
After the High-Level Financial Sector Reforms Coordination Committee headed by the Finance Ministry directed Sebon to submit a regulation on Sunday, the stock market regulator is currently in the phase of drafting the regulation. The committee has also asked Sebon to submit other necessary documents and its study report at its meeting on September 19.
A Sebon official said they were discussing the Securities’ Act’s provision that Sebon could define securities, the Contract Act, Anti-money Laundering Act, an executive order from the government, and administrative working procedure regulation act.
Sebon Chairman Baburam Shrestha said they would prepare the regulation in such a way that it fully authorises Sebon to regulate the commodities market.
Although stakeholders had long been demanding that the government regulate the market, the government started acting only after the media reported anomalies.
A study conducted by Sebon also revealed that capital flight, illegal foreign exchange transactions, deception of investors and lack of corporate governance were taking place in commodities market. A committee formed by the Finance Ministry had prepared a draft regulation two and half years ago and submitted to the ministry and Sebon, but the draft has so far remained idle.
The high-level committee last month had given a two-month time to Sebon to draft the regulation, but the news about anomalies in commodities market prompted the committee to shorten the deadline.
“It has been four years since we started urging the government to regulate us,” said Dipendra Khatiwada, managing director of Mercantile Exchange. “Although it has been late, it is good that government has given some priority to this sector.”
According to Sebon officials, the regulation being drafted will have provisions such as the process of granting license, eligibility criteria of the board of directors and capital structure. “Bylaws regarding operation of exchanges will be prepared by the exchanges themselves and they should be approved by Sebon,” said a Sebon official.
Although Sebon is all set to prepare the regulation, officials at the stock market regulator suspect about the effectiveness of a hastily prepared regulation. Sebon also lacks expertise and infrastructure necessary to regulate the market. “It will be challenging for the Sebon to regulate the commodities market in the absence of infrastructure and expertise,” said Sebon spokesperson Niraj Giri. “But the government has told us that we can hire foreign consultants, if necessary.
Giri added that Sebon could work through any internationally accredited institutions to handle software and other infrastructure related tasks for the time being. Sebon chairman Shrestha said they would also train the staff.
Source: The Kathmandu Post
The Securities Board of Nepal (Sebon) is discussing multiple options to regulate the commodities market given the current Securities Act has no such provisions.
After the High-Level Financial Sector Reforms Coordination Committee headed by the Finance Ministry directed Sebon to submit a regulation on Sunday, the stock market regulator is currently in the phase of drafting the regulation. The committee has also asked Sebon to submit other necessary documents and its study report at its meeting on September 19.
A Sebon official said they were discussing the Securities’ Act’s provision that Sebon could define securities, the Contract Act, Anti-money Laundering Act, an executive order from the government, and administrative working procedure regulation act.
Sebon Chairman Baburam Shrestha said they would prepare the regulation in such a way that it fully authorises Sebon to regulate the commodities market.
Although stakeholders had long been demanding that the government regulate the market, the government started acting only after the media reported anomalies.
A study conducted by Sebon also revealed that capital flight, illegal foreign exchange transactions, deception of investors and lack of corporate governance were taking place in commodities market. A committee formed by the Finance Ministry had prepared a draft regulation two and half years ago and submitted to the ministry and Sebon, but the draft has so far remained idle.
The high-level committee last month had given a two-month time to Sebon to draft the regulation, but the news about anomalies in commodities market prompted the committee to shorten the deadline.
“It has been four years since we started urging the government to regulate us,” said Dipendra Khatiwada, managing director of Mercantile Exchange. “Although it has been late, it is good that government has given some priority to this sector.”
According to Sebon officials, the regulation being drafted will have provisions such as the process of granting license, eligibility criteria of the board of directors and capital structure. “Bylaws regarding operation of exchanges will be prepared by the exchanges themselves and they should be approved by Sebon,” said a Sebon official.
Although Sebon is all set to prepare the regulation, officials at the stock market regulator suspect about the effectiveness of a hastily prepared regulation. Sebon also lacks expertise and infrastructure necessary to regulate the market. “It will be challenging for the Sebon to regulate the commodities market in the absence of infrastructure and expertise,” said Sebon spokesperson Niraj Giri. “But the government has told us that we can hire foreign consultants, if necessary.
Giri added that Sebon could work through any internationally accredited institutions to handle software and other infrastructure related tasks for the time being. Sebon chairman Shrestha said they would also train the staff.
Source: The Kathmandu Post
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