KATHMANDU, Jan 29: The Securities Board of Nepal (Sebon) has warned the firms concerned not to operate commodity exchange markets.
Citing growing cases of illegally-operated commodity exchanges in the country, the sector’s regulator issued a caution notice on Sunday. Although the authorities have not legalized such transactions in Nepal, many firms are operating this business without taking the license.
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Last month, the police arrested four individuals, including a foreign citizen, involved in the operation of the commodity exchange market. The firm was found providing its membership to 25,000 individuals, while it had been doing transactions worth Rs 1 billion before the organization was dismissed.
After Sebon opened licenses for two commodities exchange firms, six firms have been looking forward to receiving the license for commodities exchanges in the country. According to Sebon, the decision to provide licenses has not materialized yet.
High value agricultural products, metals, precious metals, mineral oils and edible oils, among others are traded in the commodity exchange. The market is expected to maintain the price stability of these goods, while the mechanism also minimizes the risk to the producers from the fluctuation in prices of these goods.
However, the firms illegally operating commodity markets have been found running network-type business, which risks the embezzlement of money of the general people, according to Sebon officials. The regulator has warned to take stern action against those firms that will defy the government rule.
