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Kathmandu Tuesday June 19, 2001 Ashadh 05, 2058.
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Nepse privatization begins
Post Report
KATHMANDU, June 18 - The government has
initiated the privatization process of Nepal Stock Exchange Limited (Nepse),
the only secondary market for securities trading in the country.
Officials preferring anonymity informed
The Kathmandu Post that the government presently is drawing up a model
by which the stock market could be transferred to private hands.
"The government has formulated a
program for the privatization of the Nepse," informed a source
affiliated with the project, without adding details. The overall
privatization process is expected to be completed within 2002, the
official said.
The Securities Board (SEBO), the
regulatory authority that oversees the stock market, is likely to
invite consultants once the modality of privatization is set up.
The selected consulting team would be
entrusted for upgrading the systems and rules to enable Nepse to
operate as a self-regulatory organization.
The government, after obtaining the
report of the consultants, will first develop a self-regulatory
mechanism and then push forward with the privatization process.
Further, the SEBO will also be reformed so as to strengthen its
monitoring.
The consultants would be responsible
for reviewing the rules and orders governing Nepse and draft relevant
regulations to keep the government regulatory oversight function
separate from the operation and governance of the stock exchange.
In addition, it will also develop
policy options to privatize Nepse and prepare detailed plans on its
proposed ownership, operation, funding and management under private
ownership.
Furthermore, the team will also be
responsible for establishing bylaws that are adequate to protect
investors and facilitate the efficient execution of securities
transactions.
The government almost a month ago, had
invited consulting teams for formulating strategies and plans by which
it could move forward with the corporate-governance and capital
markets reform project.
The government’s initiatives to
privatize Nepse follows the signing of an agreement with the Asian
Development Bank (ADB) last November. The government in the agreement
had pledged to send Nepse to private hands within one and half year.
Privatization of the country’s
capital market is one of the prerequisites with which the ADB moved
forward its financial sector reform project in Nepal. The ADB, for the
purpose, is providing the government with a loan assistance of Rs 750
million.
The government, Nepal Rastra Bank (NRB)
and Nepal Industrial and Development Corporation (NIDC), among others,
presently have invested in the Nepse that was formed almost six years
back.
The project also includes setting up of
a Central Depository System in order to ensure transparency in
shareholdings and to ensure safe custody and settlement of company
ownership titles.
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