Nepal's Stock Market at a Historic Turning Point: Can Short Selling End the One-Way Market?
Summary
Nepal's financial regulators are preparing to introduce short selling and other capital market reforms to modernize NEPSE, aiming to create a more balanced two-way market and stronger underlying market infrastructure.
Key Points
- Investors besieged SEBON demanding market improvements and the regulator promised to introduce short selling.
- Finance Minister Dr Swarnim Wagle committed to restructuring NEPSE with phased introduction of intraday trading, short selling, and derivatives.
- Short selling requires a functioning securities lending and borrowing market, which currently lacks legal and institutional frameworks in Nepal.
- Proper sequencing of reforms, including settlement cycle shortening and establishment of a central counterparty, is critical to avoid market failures and build investor trust.
