SEBON plans a cautious, phased start to intraday trading

Nepali investors who buy a share today cannot sell it today. That may change. On 24 September the Securities Board of Nepal (SEBON) published a concept paper on introducing intraday trading and asked brokers, investors and other stakeholders for their views, according to ShareSansar and Republica.

The proposal is deliberately modest. It would begin with a "buy first, sell later" model, in which an investor purchases a share and sells it again before the close of the same session. The reverse, selling first and buying back later, would be considered only once systems for lending and borrowing securities and for covered short selling are in place. Nor would the whole market be opened at once. SEBON proposes starting with a limited list of securities that trade regularly, have enough liquidity and carry a relatively low risk of manipulation, then widening the list after pilots and risk reviews.

Why the regulator wants it

SEBON's stated aims are more liquidity, better price discovery and a market infrastructure closer to that of its neighbours. In practice, Nepal's market has long had an unusual shape: millions of small investors, a handful of very active traders, and no tools for hedging or short-term positioning. Intraday trading would let active traders take and close positions without carrying them overnight, which typically raises turnover. The concept paper sets out requirements for brokers, margin and risk management, and real-time monitoring, according to Republica, which also reported that it was drawn up with the stock exchange, the clearing house and broker associations.

The paper follows a broader roadmap. In August, ShareSansar reported, SEBON formed a committee chaired by the head of its supervision department, with members from the Nepal Stock Exchange, CDS and Clearing and the Stock Brokers Association of Nepal, to prepare four new services in sequence: margin lending, intraday trading, securities lending and borrowing, and covered short selling. The committee began with draft margin lending regulations. The concept paper also aligns with the government's capital-market action plan of mid-September.

Margin comes first

That ordering matters. In SEBON's plan, margin lending refers to brokers financing part of a client's purchases, which is the plumbing intraday trading usually relies on. At present, leverage in Nepal's market comes mainly from banks lending against shares. Nepal Rastra Bank's monetary policy for 2026/27, announced on 7 July, raised the maximum such loan to a single borrower to Rs 250m (about $1.6m) from Rs 150m, ShareSansar reported.

Bank lending against shares has grown quickly. In a column for The Kathmandu Post in July, Paban Raj Pandey put the total at Rs 162.9bn (about $1.05bn) in mid-June, up about 16% on a year earlier and more than double the Rs 76.5bn of mid-July 2023, though still only about 2.7% of banks' loan books. He warned that easier margin rules feed rallies but can force selling in downturns, when falling prices trigger margin calls on even sound shares.

The risks

The same concern applies to intraday trading, where leverage used within a single session can magnify losses quickly. Nepal's investor base is overwhelmingly retail and relatively new. SEBON's emphasis on a phased rollout, a short list of liquid stocks and real-time surveillance reflects that.

There is also a question of capacity. Alongside the intraday paper, SEBON published a concept paper explaining its August directive, which requires substantial shareholders to give 15 days' notice before selling 5% or more of their holdings, ShareSansar reported, so its staff are managing several reforms at once. Building margin and intraday systems will require upgrades at brokers and the clearing house, and SEBON has not set a date for either.

For now, the concept paper is a statement of direction rather than a timetable. It signals that Nepal's regulator wants a more liquid, more modern market, and that it intends to get there slowly.