Recommendations:

1. The other subsections of section 101 should be made more strict with higher jail time and
penalties based on the nature of the fraud.
2. The vague areas of punishment and criteria of crime should be more specific. Margins
should be set on types of penalties for the magnitude of frauds committed.
3. Policies made by NRB, CIAA, NEPSE and SEBON should be in sync with each other so
as to avoid irregularities. Often policy brought out by one body contradicts the other.
4. Government should give enough attention and introduce adequate legal framework which
is absent at the moment.
5. The Cold War between NEPSE and SEBON should end immediately to make policies
synchronize with each other.
6. SEBON’s vision to create issuing licenses for another stock exchange to spark healthy
competition in the secondary market should be put into practise immediately.
7. Recruitment of skilled and young human power who understand modern changes related
to the capital market should be encouraged. Appointment of key personnel at major
decision making capacities should be based on merit and not political affiliations.
8. A regulation specifying the procedures to identify insider trading and the persons
involved along with the amount of penalty should be enforced as soon as possible.
9. Breaking the dominance of the financial sector in the market through the entrance of
more real sector companies and encouraging more private limited companies to
encourage conversion into public limited companies.
10. Despite the passage of more than four decades, the number of investors engaged in
securities market, though in increasing trend, is limited to about 1.6 million having
predominance of small investors with literacy rate of about 18 percent. Financial literacy
should be made a priority from school age.
11. Frameworks on market makers and stock dealers should be set up to stabilize the
secondary market in the event of erratic fluctuation.
12. Provision of institutional investors like Employees Provident Fund, Citizen Investment
Trust and Social Security Fund apart from creating a conducive environment for Non-
resident Nepalis (NRNs) to participate in Nepal’s securities market should be top agenda
of the SEBON.
13. Privatization of NEPSE is important to enhance its competitive professionalism in the
changed market scenario. Similarly, efforts toward cross-border trading of securities
should be initiated.
14. SEBON has celebrated its silver jubilee but still its office is set up in a rented building.
Greater priority needs to be given to provide it with adequate infrastructure by the
government.
15. Similarly its capacity in terms of regulation, supervision and grievance handling needs to
be upgraded to boost the confidence of the investors.
16. Currently, the SEBON’s autonomy is narrowed due to very limited authority provided by
the Securities Related Act (2007) which is an umbrella legislation of the capital market.
This should change.
17. Most of the FNCCI officials are stakeholders of these companies holding key positions.
Such a structure of the Board creates conflict of interest in the regulator’s operation and
activities. This should be reviewed to avoid undue influence.
18. Should take notes from the United States and other such countries that have stricter
policies regarding capital market frauds and an overall stronger check and balance
mechanism with stronger policies.