SEBON publishes concept paper on intraday trading, initially only 'buy first, sell later'
The Securities Board of Nepal (SEBON) has published a concept paper, 2083, for implementing intraday trading. The proposal initially allows only the 'buy first, sell later' model, with short selling and securities lending/borrowing to be considered later.
The Securities Board of Nepal (SEBON) has published a concept paper, 2083, on the implementation of intraday trading of securities. The board has put forward the concept of an 'intraday trading' system where securities are bought and sold within the same trading day and the position is settled or closed on the same day.
According to the proposed concept paper, only the 'buy first, sell later' model will be implemented in the initial phase. The 'sell first, buy later' arrangement, i.e., covered short selling and securities lending and borrowing, will be considered only after the necessary legal, technical, and institutional infrastructure is fully ready.
Although intraday trading is expected to increase liquidity and trading depth in the market, it has been seen that it may increase price volatility and risk in securities with low liquidity. In the initial phase, this system will not be applied to all listed securities; only 'eligible securities' will be selected based on certain criteria and liquidity.
Similarly, for investor protection, it is proposed to determine risk-based eligibility and make risk disclosure and orientation mandatory. Keeping in mind the size and capacity of Nepal's market, a 'Nepal Intraday Trading Model' has been proposed.
Under this model, instead of establishing a separate new entity, SEBON, NEPSE, CDSC, securities brokers, and the banking system will be integrated through technology.