A government-appointed committee has called for diversification of investment instruments, revision of trading modalities and restructuring of share ownership at the Nepal Stock Exchange (NEPSE) to attract significant investment in the secondary market.
At present, NEPSE trading is largely limited to equities, with ordinary shares, debentures and mutual funds as the main instruments. This limited range restricts investors’ ability to diversify and manage risk, according to a recent Ministry of Finance report.
The committee, led by former NEPSE chair Prakash Jung Thapa, has recommended restructuring the exchange, expanding investment products and upgrading technology to align Nepal’s stock market with international standards. Suggested new instruments include exchange-traded funds, index derivatives, intraday trading and short selling.
The report also stresses the need for improved surveillance systems, stricter insider trading regulations and better disclosure practices by listed companies. Separate trading platforms for small and medium enterprises and innovative firms have also been proposed to improve capital mobilisation.
Rejecting full privatisation, the committee advised against selling all government ownership in NEPSE, citing risks to investor confidence and market regulation. Instead, it recommended gradual disinvestment and the entry of strategic partners with 15–25 percent ownership and a minimum 10-year lock-in period.
