Investor objections to new regime of circuit breakers: Complaint to audit committee

The Nepal Stock Market Investors Association has strongly objected to the new system of circuit breaker implemented by Nepal Securities Board (SEBON) and Nepal Stock Exchange (NEPSE) as faulty and planned. The union has filed a complaint with the Public Accounts Committee of the Federal Parliament, alleging that the arrangement was done in a 'setting' and demanding a fair investigation. The association has claimed that SEBON and NEPSE have committed illegal activities with the intention of feeding a limited interest group against the interests of more than 56 million share investors. The complaint says, "Though the preamble of the Securities Board mentions the protection of investors' interests, investors have not been able to realize this in practice."

Recently, NEPSE increased the circuit break limit from 2 percent to 5 percent in the first trade after the listing of a new company, while maintaining the daily fluctuation limit of a single company's share price at 15 percent. The association believes that this new system, which came into effect on Monday 7th of Baisakh, is in direct violation of Laws Act 2081, Good Governance Act 2064 and Public Document Certification Regulations 2063. The association has alleged that the regulatory bodies like SEBON, NEPSE and CDSC are trying to run 'another state within a state' by creating procedures and guidelines on their own basis contrary to the spirit of the Acts made by the Parliament and the regulations made by the Executive. The association has demanded that there should be a serious study and investigation on the policy arrangements brought to benefit such limited groups. Citing international practice, the association concluded that the provisions implemented without due process are not only legally weak but also make the market unsafe.

The association has alleged that there is influence of a handful of interest groups in Nepal's stock market, which has a market capitalization of around 50 trillion, and that the property of common investors has been put at risk by creating political instability. The association has demanded immediate suspension of the persons involved in harming the market and a high-level investigation through the parliamentary committee and strict action if found guilty. In addition, the association emphasized that the illegally implemented policy arrangements should be immediately canceled and the market made clean and transparent.