SEBON Introduces Broker Merger Directive to Ease Capital Constraints

The Securities Board of Nepal (SEBON) has introduced the Broker Merger Directive, allowing brokerage firms to merge in an effort to meet capital requirements. The directive was approved during a recent board meeting.

In 2022 (2079 Bhadra), SEBON raised the minimum paid-up capital for brokerage firms from Rs. 2 crore to Rs. 20 crore. While newly licensed brokers have met this requirement, many firms operating before the rule change have struggled to comply.

Among the 50 brokerage firms licensed before the new, only 22 have reached the Rs. 20 crore capital threshold, leaving 28 firms still below the requirement. With the introduction of the merger directive, undercapitalized firms now have the option to merge, which is expected to reduce the total number of brokerage firms in the market.