September 20, 2020 | Investopaper
The share market of Nepal has been in existence for a relatively short span. Since the formal trading of securities started after the establishment of Nepal Stock Exchange (NEPSE) in 2050, the stock market of Nepal is only 27 years old. However, the trading of shares started unofficially in Nepal after Biratnagar Jute Mills and Nepal Bank Limited issued shares to the public in 1995 BS. At that time, there were no issue manager and stock exchange. Both the companies had managed the issue and sale of shares themselves.
After Biratnagar Jute Mills and Nepal Bank, no other institution entered the capital market for many years. Meanwhile, for the first time since the Companies Act came implementation , government issued bonds in 2021 BS. However, a systematic mechanism and body for trading securities had not been established till then.
After the establishment of Securities Exchange Center in 2033 BS, the capital market of Nepal was organized. Significant development of the secondary market was expected in Nepal after the establishment of the center. But, the necessary legal and institutional infrastructure was not available for the center to function as planned. To make the role of the center effective, Securities Exchange Act was formulated in 2040 BS. The first amendment of the Act was made in 2043 BS.
Journey Of Nepal Stock Exchange (NEPSE)
In 2050 BS, Securities Exchange Center transformed into Nepal Stock Exchange (NEPSE) after the amendment of Securities Trading Act 2040. After that, regular trading has started from Poush 29, 2050 with the calculation of the Nepse index. Similarly, Securities Board of Nepal (SEBON) was also established as an autonomous body to regulate securities transactions. In the same year 2050, NCM Mutual Fund, Nepal’s first mutual fund, came into existence.
With the objective of improving capital market operations and making securities trading easier in the secondary market, the government implemented the “Securities Act 2063”. Similarly, the Securities Market Operation Regulation 2064 was also introduced to manage the capital market. At present, Nepal’s capital market and securities trading are guided by these laws and regulations.
For nearly 14 years since the establishment of Nepse, securities trading took place through open-out cry system. Only since Bhadra 2063, the trading through computerized automated system started.
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Computerized Trading In Nepal Share Market
The major changes took place after the establishment of central depository system (CDS) in 2067 BS. CDS and Clearing started the work of making the stock market more paperless in the field of technology. This dematerialized the company’s share certificates and made it possible to trade shares through a demat account. It also contributed greatly to making the primary market completely paperless. Since Magh 1, 2075 CDS & Clearing has started trading of demat shares only.
Similarly, Nepal Stock Exchange started online share trading from Karthik 20, 2075 which has brought the share market into the new era of computerized trading. With the recent introduction of Demat, C-Asba and Mero Share and online trading of shares, the trading has become relatively easy.
Currently, Nepal Stock Exchange is the only stock exchange in Nepal for securities trading. Along with this government-owned stock exchange, the private sector is also awaiting permission to operate the stock exchange.
Important Events In Share Market Of Nepal
Before 2000 BS
Issue of shares of Biratnagar Jute Mills and Nepal Bank Limited 
Establishment of Securities Exchange center 
Formulation of Securities Exchange Act 
Commencement of trading of securities listed under the Securities Exchange Act 
Issue of shares of Rastriya Beema Company 
First Amendment to the Securities Exchange Act 
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Establishment of Nepal Stock Exchange Limited, Nepse 
Establishment of Securities Board of Nepal, Sebon 
Launch of Nepal’s first mutual fund ‘NCM’ [2050 ]
Government debentures start trading in Nepse 
Issue Of Securities Act 
Start Of computerized trading of securities 
Adoption the policy of Circuit Breaker and Trading Halt 
Live transmission of trading details through website 
Trading time increased to three hours 
Start of trading of promoter shares 
Transformation of Nepal Stock Exchange into a for-profit organization 
Establishment of OTC Market 
Start of share trading from outside the valley through brokers 
Establishment of Central Depository System CDSC 
Establishment of ICRA Nepal, the first credit rating company in Nepal 
Start Of Trading Of Dematerialized securities 
Full implementation of trading of demat securities 
Development Of Nepse App 
Trading time increased to four hours 
Market Depth available for view to the general public 
Asba system implemented in primary share offerings 
Mandatory 10 shares allotment for application in Primary Share Issue 
Development of C-Asba system 
Establishment Of Second Credit Rating Company- Care Rating Nepal 
Implementation of Electronic DIS slip, EDIS 
Online Share Trading 
Launch Of Mero Share Mobile App 
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