SEBON Overhauls Broker Tiers and Tightens IPO Net Worth Rules

The Securities Board of Nepal has initiated sweeping regulatory changes across the capital market, introducing a four-tier classification system for stockbrokers and proposing strict net worth criteria for initial public offerings under the government's broader market revival roadmap.

According to reports by Setopati and Onlinekhabar, the regulator published the Securities Broker Strengthening Policy 2083, which reorganises brokerages based on capital strength, risk absorption capacity, and service diversification. The framework divides intermediaries into Class 'A' stock dealers, Class 'B' full-service brokers, Class 'C' trading-focused brokers, and Class 'D' specialized brokerages. Onlinekhabar reported that the policy operationalizes Point 3 of the Capital Market Strengthening and Revival Action Plan, introduced under Finance Minister Swarnim Wagle, and will be carried out across three sequential phases.

Setopati reported that the new broker regime ties capital requirements to business risk, mandating separate authorizations for margin trading, short selling, securities borrowing and lending, and market making. The policy also tightens corporate governance by capping cross-holding and beneficial ownership, facilitating brokerage mergers, and mandating technical safeguards. Brokerages must implement digital customer verification, multi-factor authentication, regular IT penetration audits, and emergency "kill switches" capable of halting trading during severe system disruptions. High-frequency and algorithmic trading will also require SEBON's prior approval.

Hydro Promoters Challenge IPO Criteria

Simultaneously, the regulator's draft guidelines on public offerings have sparked friction with infrastructure developers. Onlinekhabar reported that draft public issuance rules require an issuing company's net worth per share to remain at or above its nominal face value, which is generally Rs 100.

Mohan Kumar Dangi, president of the Independent Power Producers' Association, Nepal (IPPAN), told Onlinekhabar that statutory equipment depreciation during project construction naturally depresses book values before commercial operation. Dangi warned that the Rs 100 benchmark could disqualify up to 60 percent of hydropower projects and urged the regulator to lower the limit to Rs 90. Onlinekhabar noted that 43 of the 111 hydropower companies currently listed on the exchange possess a net worth below Rs 100 per share. In response, a senior SEBON official told the outlet that the board is examining stakeholder feedback and is open to revising the net worth threshold before resuming clearance for the 112 companies currently awaiting IPO approvals.

Fintech Hurdles Over NEPSE Data Costs

As regulatory frameworks tighten, technology entrepreneurs are also urging state institutions to eliminate cost barriers to financial innovation. Techpana reported that high pricing under the Nepal Stock Exchange's 2020 data procedure continues to stifle homegrown financial technology startups.

Commercial developers seeking real-time price feeds must pay Rs 60,000 each month alongside a one-time connection charge of Rs 100,000, bringing baseline first-year access expenses to Rs 820,000 before taxes and operational overheads. Techpana noted that sector developers are advocating for tiered sandbox environments, discounted temporary licenses for early-stage startups, and free access to end-of-day market statistics so local firms can build analytics and portfolio tracking products.