SEBON Begins Process to Introduce Margin Lending, Short Selling in Nepal's Capital Market

The Securities Board of Nepal (SEBON) has initiated the process of introducing advanced Securities Financing Services into Nepal's capital market by publishing a comprehensive Consultation Paper on Margin Lending, Securities Lending and Borrowing (SLB), and Short Selling. In a statement, the regulator said the paper has been released for the first time to assess market readiness and gather feedback from stakeholders before implementing the new financial instruments. The move is aimed at implementing the Nepal government's FY 2083/84 budget announcement, which proposed the phased introduction of intraday trading, short selling, and derivatives in the domestic stock market. According to SEBON, the introduction of margin trading, securities lending and borrowing, and covered short selling is expected to deepen market liquidity, enhance efficiency, and make Nepal's capital market more competitive and aligned with international standards. The consultation paper outlines Nepal's current capital market landscape, global best practices, regulatory impact analysis, and policy recommendations for implementing these services. It also defines the roles of SEBON, NEPSE, CDSC, stockbrokers, banks, financial institutions, and institutional investors, while addressing legal reforms, technological upgrades, and risk management measures. After reviewing stakeholder feedback, the board plans to draft separate regulations for Margin Lending, Securities Lending and Borrowing, and Covered Short Selling, with the goal of strengthening market stability and mobilizing long-term private sector capital.