Rastra Bank starts discussion about Margin Trading; Margin Trading supposed to be implemented soon after Monetary Policy

Nepal Rastra Bank has started discussions regarding the Margin Lending provision. Securities Board of Nepal (SEBON) has sent the  already passed the procedure for Margin Lending to the Rastra Bank. Following that, Rastra Bank had a discussion regarding the matter on Monday.

Margin Lending will enable the banks and financial institutions to provide loans to the investors via brokers. For the purpose, the banks and financial institutions need to take approval from the regulatory Rastra Bank.

As per the reports, Rastra Bank will lay few conditions for the financial institutions to operate the margin trading. The institutions fulfilling those conditions will only be able to provide margin loans to the investors.

Initial discussions suggest that the banking institutions’ capital, state of business, profit and company’s governance will be the main conditions that the Rastra Bank will take into consideration before providing approval to any institutions.

As the provision of Margin Lending is connected with the Rastra Bank, it will also be preparing its own procedure regarding the matter. The preparation of the procedure will be started after the presentation of Monetary Policy.

After Rastra Bank prepares its procedure, NEPSE will start asking applications from the interested broker companies to provide margin credit.  SEBON has already set its criteria for the broker companies to be eligible to provide margin credit. It can be assumed that the margin lending facility will be implemented soon after the Monetary Policy.