KATHMANDU, NEPAL
The commodity market is unlikely to be regulated anytime soon as the Law Ministry has rejected the idea of controlling it by issuing a regulation. Speculative trading in commodity like precious and industrial metals, petroleum products and agricultural goods, among others, has been the major highlight of the commodity exchange.
Prompted by reports of gullible investors being deceived in the unregulated market, the government has been working to monitor the sector through a regulation as there is no act and there is no Parliament to pass legislation. According to a study conducted by the Securities Board of Nepal (Sebon), 80 percent of the investors in the commodity market have lost money.
However, the Law Ministry has told the Finance Ministry that there should be a separate act to regulate the sector as a regulation would not be strong enough to keep the market in line.
The Finance Ministry had suggested preparing a draft of the regulation based on the rights bestowed by Administrative Procedures (Regulation) Act 1956 which allows the government to frame rules to smoothly regulate administrative matters adopted by various government offices related to finance, accounts and auditing.
The Law Ministry’s joint secretary Tek Prasad Dhungana said that this act only allows the government to frame working procedures to ease service delivery. “As the commodity market needs a strong supervisory and licensing body, and there should be a provision for penalty for unlawful acts, we told the Finance Ministry that only an act would be effective,” Dhungana said. He added that there was a need for a separate act to regulate the sector as commodity were different from stocks.
The Finance Ministry had sent a draft of the regulation to the Law Ministry after Sebon made an initial draft which would allow it to regulate the commodity market by introducing the regulation under the Administrative Procedures (Regulation) Act.
According to a Finance Ministry official, the Law Ministry had rejected an earlier draft of the regulation that sought to open the door through clause 116 of the Securities Act enabling the Securities Board of Nepal (Sebon) to regulate the sector. The clause has given Sebon the power to frame rules stating that it may, in order to implement the objectives of this act, frame necessary rules with the approval of the government.
Although this clause has given Sebon the authority to frame regulations for various tasks related to securities trade, it has not mentioned anything about the commodity market. “The Law Ministry has rejected framing the regulation based on this clause in the Securities Act as it does not say anything about the commodity market,” said the Finance Ministry official involved in drafting the regulation.
The Sebon study also found that the commodity market had been conducting transactions in foreign exchange without the central bank’s approval as required by the Foreign Exchange Regulation Act. It also pointed out that there was high probability of capital flight and high chances of investors suffering losses.
Source:ekantipur.com May 13th 2013
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The commodity market is unlikely to be regulated anytime soon as the Law Ministry has rejected the idea of controlling it by issuing a regulation. Speculative trading in commodity like precious and industrial metals, petroleum products and agricultural goods, among others, has been the major highlight of the commodity exchange.
Prompted by reports of gullible investors being deceived in the unregulated market, the government has been working to monitor the sector through a regulation as there is no act and there is no Parliament to pass legislation. According to a study conducted by the Securities Board of Nepal (Sebon), 80 percent of the investors in the commodity market have lost money.
However, the Law Ministry has told the Finance Ministry that there should be a separate act to regulate the sector as a regulation would not be strong enough to keep the market in line.
The Finance Ministry had suggested preparing a draft of the regulation based on the rights bestowed by Administrative Procedures (Regulation) Act 1956 which allows the government to frame rules to smoothly regulate administrative matters adopted by various government offices related to finance, accounts and auditing.
The Law Ministry’s joint secretary Tek Prasad Dhungana said that this act only allows the government to frame working procedures to ease service delivery. “As the commodity market needs a strong supervisory and licensing body, and there should be a provision for penalty for unlawful acts, we told the Finance Ministry that only an act would be effective,” Dhungana said. He added that there was a need for a separate act to regulate the sector as commodity were different from stocks.
The Finance Ministry had sent a draft of the regulation to the Law Ministry after Sebon made an initial draft which would allow it to regulate the commodity market by introducing the regulation under the Administrative Procedures (Regulation) Act.
According to a Finance Ministry official, the Law Ministry had rejected an earlier draft of the regulation that sought to open the door through clause 116 of the Securities Act enabling the Securities Board of Nepal (Sebon) to regulate the sector. The clause has given Sebon the power to frame rules stating that it may, in order to implement the objectives of this act, frame necessary rules with the approval of the government.
Although this clause has given Sebon the authority to frame regulations for various tasks related to securities trade, it has not mentioned anything about the commodity market. “The Law Ministry has rejected framing the regulation based on this clause in the Securities Act as it does not say anything about the commodity market,” said the Finance Ministry official involved in drafting the regulation.
The Sebon study also found that the commodity market had been conducting transactions in foreign exchange without the central bank’s approval as required by the Foreign Exchange Regulation Act. It also pointed out that there was high probability of capital flight and high chances of investors suffering losses.
Source:ekantipur.com May 13th 2013
You may also like:
Canadian Investors now in Nepal and looking to invest in Nepal
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