NEPSE Auction Market and NRN Investment Set for Launch: CDSC Says Preparations Nearly Complete

Published: October 1, 2026 | Category: Nepal Stock Market News

NEPSE Auction Market and NRN Investment Set for Launch as CDSC Advances Capital Market Reforms

Nepal's capital market could soon see significant developments, with the introduction of an auction market and the potential entry of Non-Resident Nepali (NRN) investment moving closer to implementation.

According to a report published by Mero Lagani on September 30, 2026, Kanchan Sapkota, Acting Chief Executive Officer of CDS and Clearing Limited (CDSC), said that preparations for these initiatives have progressed substantially. She shared the update during a discussion organized by the Finance Committee of the Federal Parliament.

The discussions also covered improvements in securities settlement, the calculation of weighted average costs for shares, the Settlement Guarantee Fund, a proposed Central Counterparty (CCP) mechanism and electronic voting for shareholders.

These developments could influence how Nepal's stock market operates, how investors participate and how market infrastructure manages settlement-related risks.

1. NEPSE Auction Market: Preparations Moving Forward

The proposed auction market is among the major reforms being developed for Nepal's secondary stock market.

According to Sapkota, the technical and operational preparations are progressing through coordination between the Nepal Stock Exchange (NEPSE), CDSC and the relevant regulatory bodies.

Under the proposed arrangement:

• NEPSE will operate the auction market.

• CDSC will handle the settlement process.

• Relevant institutions will coordinate to establish the necessary operational framework.

An auction market could provide a structured mechanism for transactions involving securities handled through an auction process. Its actual benefits will depend on the final operating rules, eligible securities, trading procedures and settlement arrangements.

For investors, the implementation details will be important. They should monitor official announcements from NEPSE, CDSC and the Securities Board of Nepal (SEBON) for information about eligibility, participation and transaction procedures.

The CDSC chief indicated that the initiative was approaching a stage where results could be announced soon. However, the report did not provide a confirmed launch date.

2. NRN Investment in Nepal's Share Market: Final Preparations Underway

The proposed entry of Non-Resident Nepali investment is another important development for Nepal's capital market.

Sapkota stated that substantial groundwork had been completed by the concerned institutions, including CDSC, SEBON and NEPSE.

The objective is to facilitate the formal channeling of NRN funds into Nepal's share market through an appropriate regulatory and technical framework.

Potential implications include:

• Expanding access to Nepal's capital market for eligible NRN investors.

• Creating a formal mechanism for investment participation.

• Potentially broadening the investor base.

• Supporting the development of Nepal's securities market.

However, the practical impact will depend on the final rules governing investor eligibility, fund transfers, account opening, repatriation, taxation and compliance.

Although the institutional groundwork was described as substantially complete, the report did not confirm a commencement date or provide the final investment procedures.

Investors should therefore distinguish between preparations being completed and the formal opening of the investment channel.

3. CDSC Working on a Solution to the WACC Calculation Issue

The calculation of the weighted average cost associated with shareholdings has been a source of confusion for investors, particularly when bonus shares or rights shares have been announced but have not yet been credited to their Demat accounts.

According to Sapkota, the existing legal framework does not allow CDSC to calculate the relevant cost by treating future shares as though they are already owned by an investor.

This creates a timing issue when investors attempt to understand their adjusted shareholding costs before the additional shares are credited.

CDSC has reportedly discussed possible solutions with SEBON.

The options being explored include:

• Reducing the time required for additional shares to be listed.

• Exploring separate record-date arrangements for voting and other purposes.

• Making price adjustments through NEPSE when the shares are listed, in accordance with the applicable framework.

The objective is to reduce investor confusion while ensuring that share records, ownership and price adjustments comply with the law.

Any change will depend on the final regulatory decision and the procedures adopted by the relevant institutions.

4. Settlement Guarantee Fund to Become More Effective

CDSC is also working to improve the operation of the Settlement Guarantee Fund, which is intended to help address settlement failures in the stock market.

Nepal's securities market operates on a T+2 settlement cycle, meaning settlement is generally scheduled for two business days after the transaction date, subject to the applicable rules.

The fund is designed to support settlement continuity when a settlement failure occurs.

Sapkota said that CDSC was exploring ways to make the fund more effective and useful for brokers.

The proposed improvements include:

• Making the fund more operationally flexible.

• Exploring arrangements that would allow brokers to access funds for settlement purposes under defined conditions.

• Increasing the fund's size over time.

• Supporting continuity in the settlement process.

A more effective settlement framework could help strengthen confidence in the market. However, the practical effectiveness of any revised arrangement will depend on its governance, access conditions, risk controls and implementation.

5. CDSC Says It Can Manage a Central Counterparty System

A Central Counterparty (CCP) is a market infrastructure institution that interposes itself between the buyer and seller in eligible transactions, helping manage counterparty risk and supporting settlement performance.

During the parliamentary discussion, Sapkota argued that CDSC's experience and existing infrastructure make it capable of taking responsibility for such a system.

She highlighted CDSC's approximately 15 years of experience and its role in maintaining securities records and supporting settlement-related functions.

A CCP framework can involve important responsibilities, including:

• Managing counterparty exposure.

• Establishing risk-management procedures.

• Maintaining adequate financial resources.

• Monitoring and managing settlement obligations.

• Ensuring operational resilience.

The establishment of a CCP would require an appropriate legal, regulatory, technological and risk-management framework. The report presents CDSC's position on its capability; it does not establish that a CCP has already been launched or that the final institutional arrangements have been approved.

6. E-Voting System for Shareholders Is Being Prepared

CDSC is also working on an electronic voting system that could allow shareholders to participate in company general meetings digitally.

Such a system could make shareholder participation more accessible, particularly for investors who cannot attend meetings in person.

According to Sapkota, CDSC has completed substantial preparatory work. However, amendments to the Companies Act would be required before the system could be implemented under the proposed arrangement.

Potential benefits of electronic voting include:

• Easier participation in company meetings.

• Reduced dependence on physical attendance.

• More convenient voting for geographically dispersed shareholders.

• Improved digital access to corporate decision-making.

The legal framework, identity verification, voting security and procedures for validating shareholder participation will be important elements of implementation.

7. Stronger CDSC Infrastructure Needed to Protect Investors

CDSC plays a central role in maintaining the electronic records of securities held by investors in Nepal.

Sapkota emphasized that the institution's infrastructure must be technically sound, secure and capable of protecting investors' assets.

With more than eight million investors connected to the country's capital market, the reliability of the depository and settlement infrastructure is particularly important.

Operational resilience, cybersecurity, data protection and reliable transaction processing are essential to maintaining investor confidence.

She stressed that infrastructure quality should not be compromised, given CDSC's responsibility for safeguarding securities records.

For investors, stronger market infrastructure can support confidence in the systems used to hold, transfer and settle securities. It does not, however, eliminate the investment risks associated with changes in share prices or company performance.

8. CDSC Urges Investors to Protect Their MeroShare Credentials

Alongside the proposed reforms, Sapkota reminded investors to take personal responsibility for protecting their securities-related information.

Investors should keep the following information secure:

• MeroShare username and password.

• Demat account details.

• Citizenship and identity documents.

• Delivery Instruction Slip (DIS) details and related credentials.

Investors should avoid sharing sensitive information casually or handing over account access to unauthorized individuals.

It is also important to verify requests for personal information and use official channels when managing Demat accounts or transferring securities.

Good account-security practices are an essential part of protecting investments in an increasingly digital capital market.

What Do These Developments Mean for Nepal's Stock Market?

The proposed auction market, NRN investment channel, settlement improvements and digital shareholder services form part of a broader effort to modernize Nepal's capital market.

If implemented effectively, these initiatives could improve market access, operational efficiency and the infrastructure supporting securities transactions.

However, announcements about preparations should not be interpreted as confirmation that every reform is already operational.

Investors should watch for formal notices, implementation dates and detailed operating guidelines from NEPSE, CDSC and SEBON.

For those following the market, understanding these structural changes is just as important as monitoring daily NEPSE movements, company fundamentals and technical indicators.

Readers can also explore Sarbaguna's resources on NEPSE analysis, support and resistance  and share market learning in Nepal .

Conclusion

Nepal's capital market is preparing for several potentially important changes. CDSC Acting CEO Kanchan Sapkota has indicated that preparations for the auction market and NRN investment have advanced significantly, while work continues on settlement infrastructure, cost calculations and digital shareholder services.

The next major step will be the formal implementation of these initiatives, supported by clear regulations, operational procedures and public announcements.

Until then, investors should rely on official updates and continue to make investment decisions based on their own research, risk tolerance and financial objectives.

Frequently Asked Questions (FAQ)

1. When will the NEPSE auction market start?

CDSC's Acting CEO said preparations were nearing completion and that an announcement could come soon. However, no confirmed launch date was provided in the report.

2. Will NRNs be able to invest in Nepal's share market?

The relevant institutions have reportedly completed substantial groundwork for facilitating NRN investment. The actual process will depend on the final rules and an official implementation announcement.

3. What is the role of CDSC in the auction market?

Under the proposed arrangement, NEPSE will operate the auction market, while CDSC will be responsible for settlement.

4. What is a Central Counterparty (CCP)?

A Central Counterparty is a financial market institution that stands between buyers and sellers in eligible transactions and helps manage counterparty and settlement risks.

5. What is the Settlement Guarantee Fund?

It is a fund designed to help address settlement failures and support the continuity of securities transactions under the applicable settlement framework.

6. Why is WACC calculation an issue for bonus and rights shares?

The timing of share allotment, crediting and listing can affect when additional shares are reflected in an investor's holdings and related cost calculations. CDSC is exploring possible changes to reduce confusion while complying with existing rules.

7. Will CDSC introduce electronic voting for shareholders?

CDSC has reportedly completed substantial preparatory work. Changes to the Companies Act are required before the proposed system can be implemented.

8. How can investors protect their MeroShare accounts?

Investors should keep their usernames, passwords, Demat information and DIS credentials confidential, avoid unauthorized access and use official channels for securities-related transactions.

9. Where can I learn about NEPSE and stock market analysis in Nepal?

You can explore Sarbaguna's stock market training courses  for learning resources covering Nepal's stock market, investment concepts and market analysis.

10. Does Sarbaguna offer a Forex trading course in Nepal?

Sarbaguna provides information about trading education, including its Forex Trading Course in Nepal . Learners should understand the risks of Forex trading and check applicable rules before participating.

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