Sebon weighing options for regulation

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

Govt to fix paid-up capital of commodity exchanges at Rs 500m

KATHAMNDU, Aug 13, 2012

The government is preparing to make it mandatory for commodity market operators to have paid-up capital of at least Rs 500 million.

Amid growing concern over anomalies, including poor management, weak infrastructure, inadequate capital and opaque transactions process in commodity exchanges, the Security Board of Nepal (Sebon) -- the capital market regulator - is preparing to incorporate host of measures in the upcoming Commodities Market Regulations to regulate the market.

“We are proposing paid-up capital of at least Rs 500 million for commodity market operators so as to ensure that they provide better and reliable service to investors,” Nabaraj Adhikari, deputy director of Sebon, said.

Speaking at a program on ´Challenges and Future of Commodities Market in Nepal´ organized by Society of Economic Journalists-Nepal (SEJON) on Sunday, Adhikari also said Sebon will propose paid-up capital of Rs 100 million and Rs 10 million respectively for clearing and non-clearing agents working on behalf of the commodity exchanges.

Adhikari also said Sebon was preparing to issue a guideline as a stop-gap measure to regulate the commodities market in the absence of Commodities Market Act.

Though the government has almost finalized the Act, its enactment has been affected in the absence of parliament.

Baburam Shrestha, chairman of Sebon, also said formulation of guidelines for commodities market operation would be finalized within a couple of months. “We can partially regulate the commodities and derivatives market once the guidelines are finalized,” Shrestha said, urging commodities market operators to come up with a code of conduct for self regulation in the absence of legal provision to regulate them.

Speaking on the occasion, Santosh Pradhan, director of Nepal Derivatives Exchange (Ndex), shed light on the growing malpractices in the commodities market in the absence of a regulatory body. “In the lack of legal provision specifying capital structure, management and infrastructure of commodities market, we have seen anomalies in the market,” Pradhan said. “Commodities exchanges have been opened at an investment of as low as Rs 2.5 million, putting money of investors at risk,” he added.
At present, there are four commodity exchanges and 200 brokers. Around 20,000 investors have put their money in commodities and derivatives market.

 

 

Source: Republica

Gold hits historic high of Rs 56,800

KATHMANDU, JUNE 4, 2012

The precious yellow metal has reached another height in the domestic market due to the weakening rupee and rising international prices. Gold price was fixed at Rs 56,800 per tola (11.664 grams) today –– Rs 1,600 higher than yesterday’s price.

The international bullion market saw the price of gold rallying up on the cue of weak employment numbers in the US. On Friday, the discouraging US employment result shifted the focus of the investors from the US dollar to a more dependent safe haven gold.

Last month, gold was feared to have entered a bearish run as the weakening euro had driven investors to dollars instead of gold. Now, since the US economy also seems to be in troubled waters along with the Eurozone, gold has reclaimed its throne.

The strong dollar against the Nepali currency has also contributed in pushing the price of gold to its current high. The exchange rate for the dollar being around Rs 90 pushed the prices up despite gold being traded approximately at $1650 per ounce in the international commodities markets.

Gold had reached its earlier record of Rs 56,000 on May 4 after the government hiked the customs duty. The future of Greece staying in the euro along with the questionable Spanish solvency situation had already propelled the flight of investors to dollars and now with the escalated jobless rate in USA, gold is expected to go bull once again.

Source: THT

Price of essential commodities increases

KATHMANDU, May 20, 2012

Prices of essential food commodities have increased by around 8 to 12 percent in the market on Saturday after traders raised the rates citing low supply due to frequent strikes and rise in the prices in India, from where most commodities are imported.

Rice, sugar, beans and lentils have become dearer by Rs 3 to 25 per kg. Similarly, price of edible oil has also increased in the range of Rs 5 to 10 per liter depending on the brand.

“Though prices of commodities increased very slightly in India, prices of commodities have gone up by up to Rs 25 in the retail market here in the absence of government rules and regulations on pricing,” said Ram Krishna Manandhar, vice president of Nepal Retailers´ Association.

“Though food is our basic need, the government is doing nothing to ensure its easy availability,” he said, adding, “Almost 70 percent of the demand is met through imports and a slight increment in prices in other countries highly affects the prices here.”

On Saturday, prices of all varieties of rice increased by up to Rs 100 per 30 kg compared to Sunday. The price of Rahar dal increased by Rs 5 to Rs 100 per kg and Musur Dal by Rs 25 to Rs 110 per kg. Similarly, prices of Mas dal and Chana dal rose by Rs 10 and both items are now selling at Rs 110 per kg.

The price of sugar increased by Rs 8 per kg and will now be available at Rs 70 per kg. Likewise, sunflower oil and soybean oil have become dearer by Rs 5 per liter and are now selling at Rs 145 and Rs 140 per liter respectively. The price of mustard oil has also become dearer by Rs 10 and is currently available at Rs 150 per liter.
“The prices of essential commodities have gone up as suppliers raised the prices in line with the increment in the international market and the disruption in supply due to frequent strikes has led to a shortage,” said Pabitra Bajracharya, president of Nepal Retailer´s Association and proprietor of Dallu Khadhya Bhandar.

The price of vegetable ghee has also increased by Rs 5 per kg which is now available at Rs 120 per kg. Similarly, the price of gram has increased by Rs 15 to Rs 95 per kg while the prices of other beans will also increase soon, according to the traders.

Source: Republica