KATHMANDU: The Securities Board of Nepal (SEBON) has paved the way for mergers among securities brokerage companies by issuing the Directive on Mergers/Acquisitions of Securities Dealers, 2025.
While banks and insurance companies have merged in recent years, this is the first official policy that allows brokerage firms to follow suit.
The directive comes just three months before the deadline requiring all brokerage companies to raise their paid-up capital to Rs 200 million — a regulation set to take effect from the upcoming fiscal year 2025/26.
While 54 out of the 92 operating brokerage companies have met this threshold, 38 have yet to do so, according to SEBON spokesperson Niranjay Ghimire.
Brokerage companies have expressed concerns over the timing of the directive and are asking for more time to raise capital.
Sagar Dhakal, president of the Stock Brokers Association of Nepal, stated that while the move to allow mergers is welcome, the capital requirement jump — from Rs 20 million to Rs 200 million — is too abrupt.
“Such a drastic increase is problematic,” said Dhakal. “We’re asking for both time and the option to merge, but SEBON has only offered mergers.”
Dhakal also raised issues regarding margin lending licenses, which previously required Rs 50 million in capital and now require Rs 600 million.
“There has been no clarity on whether old licenses will be renewed under the new requirement,” he added.
He argued that, just like the government gave banks and insurers a grace period for mergers, brokers should also be granted additional time.
“We are requesting a two-year extension. The current market contraction means profits are low, and time will allow us to reinvest earnings into meeting capital requirements,” Dhakal said.
Bhakti Ram Ghimire, General Secretary of the Brokers Association, echoed Dhakal’s concerns. “We agree with the merger policy for the long run, but our immediate concern is the capital deadline,” he said.
Ghimire criticized what he called the impractical jump in capital requirements over the years — from Rs 2 million to Rs 5 million, then Rs 20 million, and now Rs 200 million.
He claimed that currently, only 20 brokers are profitable, with many operating at a loss or break-even point.
“Doing trades worth Rs 10 million yields around Rs 39,000 in profit, and after paying taxes and operational costs, you’re left with barely Rs 14,000,” he said. “Running an office with staff, rent, and internet requires at least Rs 400,000 to Rs 500,000 monthly.”
He also pointed out that while new brokers may have met the capital requirement, they lack sufficient business. On the other hand, older brokers have strong business volume but haven’t met the capital threshold.
“The merger policy now allows both groups to potentially benefit through collaboration,” he said.
Despite the concerns, SEBON spokesperson Niranjay Ghimire said the deadline remains unchanged.
“The 38 brokers who haven’t met the requirement have committed to doing so by June. We are optimistic they will comply,” he said.
As of now, SEBON has not officially discussed extending the deadline. “There has been no internal decision on an extension,” Ghimire said. “We’re waiting to see how the brokers proceed.”
While the door is open for mergers, it remains to be seen whether SEBON will accommodate the industry’s call for more time — a demand gaining urgency as the fiscal deadline draws near.
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