Nepal Securities Board Unveils Draft Policy Aiming to Develop Mutual Funds as a Vehicle for Long-Term Capital Mobilization
The Nepal Securities Board has published the draft of the Mutual Fund Policy, 2083, with the primary goal of developing mutual funds as a means of long-term capital mobilization. The draft emphasizes open-ended schemes, the development of new instruments such as ETFs, REITs, infrastructure and green funds, transparency, and investor protection. Stakeholders can submit suggestions by Kartik 15.
Kathmandu – The Nepal Securities Board (SEBON) has set a goal to develop mutual funds as a vehicle for long-term capital mobilization. This objective is outlined in the draft of the Mutual Fund Policy, 2083, published by the board.
In point no. 2 of the Capital Market Strengthening and Revival Action Plan, 2083, issued by the Ministry of Finance on Bhadra 29, the board prepared this draft policy to develop instruments such as the bond market, money market, and ETFs, and to make mutual funds a professional, diversified, transparent, risk-conscious, technology-friendly, and long-term investment cornerstone.
As per the action plan to immediately publish the mutual fund policy and arrange directives and other necessary infrastructure by mid-Mangsir 2083, the Securities Board has made the draft public for consultation to gather opinions, suggestions, and identify areas for improvement from relevant stakeholders.
The proposed policy aims to address the establishment, operation, regulation, and supervision of mutual funds in an integrated manner, making the mutual fund industry modern, transparent, secure, and competitive, while strengthening long-term capital mobilization and investor protection, and focusing on the development of institutional investors.
The proposed policy includes the following key provisions:
- Prioritizing open-ended schemes;
- Developing new investment instruments such as Exchange Traded Funds (ETFs), Real Estate Investment Trusts (REITs), infrastructure and green funds;
- Diversifying investments;
- Adopting transparent asset valuation methods;
- Emphasizing effective management of liquidity and repurchases; and
- Providing timely information to investors.
Additionally, the policy emphasizes transparency, grievance management, conflict of interest control, competitive fee structures, risk management, and institutional governance for investor protection. Digital services and cybersecurity have also been made important aspects of the regulatory framework.
The proposed policy acknowledges that mutual fund schemes depend on the expert (specialized) capacity of the scheme manager, and prioritizes strengthening the manager's capacity, human resources, information technology infrastructure, and overall management capacity, as well as reflecting performance in management fees.
The Securities Board expects that the phased implementation of the proposed policy will contribute to mobilizing the long-term savings of small savers into the capital market, expanding diverse investment opportunities, and contributing to market stability.
The Securities Board has also stated that suggestions on the proposed policy can be submitted by Kartik 15.