Nepal’s capital market got its day in Parliament on Wednesday morning. At 8:30 AM, the House of Representatives’ Finance Committee summoned the entire plumbing of the share market to Singha Durbar: the Finance Ministry secretary, SEBON’s chairman, NEPSE’s chief executive, the CDS chief, the broker association and three investor associations to answer a single question: how do you make this market orderly, transparent, trustworthy and investor-friendly?
When a parliamentary finance committee puts the regulator, the exchange, the depository and the investor lobby in one room, the issue has political weight. This was not a routine briefing. And what emerged, on the record, was a strange consensus: everyone agreed the market is badly governed, and nobody agreed whose fault it is. Beneath the noise, something important: the government’s own 21-point revival plan is already in motion, and Wednesday’s hearing happened inside it, not outside it.
The sharpest words came from Khagendra Raj Kandel, general secretary of the Nepal Share Market Investors Association. He alleged that the Finance Ministry pays little attention to the bodies that should care about the share market and works mostly with limited, vested-interest groups, and that the market’s condition is the result of the ministry’s priorities. An allegation made in Parliament is still an allegation, not an established fact. It is recorded here as his claim, because that is what it is.
His concrete demand was legislative. The governing Securities Act dates to 2063 BS (2006 AD): roughly twenty years old, written before demat trading, online TMS and most of today’s market structure existed. Kandel’s argument: the market is being run on two-decade-old law while global markets have moved on. He added two striking enforcement claims: that manipulators moving billions face one to one-and-a-half years of jail on paper but walk free on fines of Rs 40,000 to 50,000, and that most SEBON chairmen end up resigning and fleeing, asking whether resignation can absolve proven wrongdoing. The data behind those claims was not tabled in the reporting. They stand as his assertions from the hearing.
Ghanshyam Pande, chairman of the Nepal Shareholders Association, aimed at market structure rather than the ministry. He blamed two things for the market’s condition: promoters’ “IPO farming” and a weak regulator. His most vivid line: dumping promoter shares the moment the three-year lock-in expires poses more risk to the secondary market than the Bhotekoshi flood. He flagged the flood of right shares in hydropower and manufacturing straining supply absorption, and said margin lending still does not work in practice. The rules allow a Rs 4 lakh limit against a Rs 1 lakh deposit, he said, but investors struggle to actually get it. He rejected the argument that the 10-share IPO allotment policy ruined the market, defending it as small-investor access. And notably, he thanked the Finance Ministry for its capital-market action plan and backed SEBON’s proposed IPO issuance directive, a reminder that the industry is not uniformly hostile to the official reform track.
The hearing’s analytical spine came from market expert Ajaya Kumar Shrestha. His core argument: Nepal’s capital-market policies are oriented toward trading and short-term profit rather than investor interest, and the design risks turning retail investors into speculators with a gambling mentality, which, he said, does not work in a market like Nepal’s. He pointed to weak investigation of manipulation, insider trading, circular trading and pump-and-dump schemes.
His most counter-intuitive point deserves attention: governance reform may push the index down, and that should be accepted. Even if the NEPSE fell from 2,600 to 2,000 while market infrastructure improves, he said, the correction should be taken as natural. Building infrastructure and demanding the index always rise cannot go together. That is a statement about trade-offs, not a price prediction, and it cuts against the reflex that every reform must be judged by next week’s index level.
His practical proposals were specific: bring all disclosures onto a single SEBON digital platform: information is scattered today, feeding misinformation; standardize stalled IPOs on governance criteria and move them forward, because frozen IPOs also choke private capital and venture-capital exits; evaluate market readiness before introducing complex tools like short selling and margin trading; open up competition in broking and TMS with open API access, arguing that data monopoly stifles market technology; and stop discouraging in practice what book building and premium-IPO price discovery promise on paper.
Here is the part the shouting can obscure. On Bhadra 29, the Finance Ministry published its Capital Market Strengthening and Revival Action Plan, 2083, a 21-point package unveiled by Finance Minister Dr Swarnim Wagle. Acting on it, a mid-September Cabinet meeting cut the capital gains tax on listed-share sales to 3.5% for holdings over 365 days and 5% for shorter holdings, roughly halving the budget’s rates after revenue from the higher rates collapsed 54%. The full arithmetic of that episode is broken down in this earlier piece.
Then SEBON moved on issuance quality. The board published the draft “Public Issuance General Qualification Directive, 2083” for public comment: a risk-based qualification system for IPOs covering eligibility, governance, prospectus disclosure, due diligence and post-issue obligations, framed as the first implementation step of the ministry’s action plan (sebon.gov.np). The draft is already drawing fire: IPPAN, the independent power producers’ association, has formally asked SEBON to carve out hydropower, arguing one-size-fits-all net-worth and operating-history tests would block under-construction projects from raising public capital at the stage they need it most. Whether the directive survives that pushback in its current form is now the reform to watch.
Four things to watch from here. First, the committee’s own conclusions. Wednesday produced testimony, not decisions; what the Finance Committee recommends next will determine whether this becomes law or theatre. Second, SEBON’s draft IPO directive after the comment window closes. The hydro carve-out fight will set the tone for every issuance rule that follows. Third, the Gazette: the new 3.5%/5% tax rates apply after formal publication and system updates, so confirm the live rate in settlement notes before transacting. Fourth, the Securities Act itself: Kandel’s demand for a new law is the longest fuse in the room, and the one that would matter most.
The honest summary of Wednesday morning: the stakeholders agree the market is badly governed and disagree on whose fault it is. The government, for its part, has stopped defending the status quo: the action plan, the tax reversal and the draft directive are all admissions that the old settings failed. Reform that everyone applauds on day one rarely survives contact with vested interests. The test is what the directive, the Act and the committee’s recommendations look like six months from now.
This article is published for research and education purposes only. It is not investment advice, and nothing here should be read as a recommendation to buy, sell, or hold any security. Statements from the hearing are attributed to their speakers as reported by Nepali media present at the proceeding; allegations remain allegations until established. Policy details reflect officially announced government actions; verify final legal texts before acting.