SEBON Drafts Margin Lending Transactions Regulations 2083

20th August 2026, Kathmandu

The Securities Board of Nepal SEBON has prepared the draft of the Margin Lending Transactions Regulations 2083.

SEBON Drafts Margin Lending Transactions Regulations

The proposed regulatory framework is structured to govern margin lending activities in the securities market by focusing on investor protection market fairness risk based regulation transparency and financial stability.

Mandatory Licensing and Service Authorization

Under the proposed regulations institutions intending to offer margin lending services must secure formal permission from SEBON. Entities without explicit approval will be prohibited from providing advertising or representing themselves as margin lending service providers.

Eligibility Criteria and Customer Assessment

Service providers will be required to conduct formal evaluations of prospective margin lending clients. Assessments must review:

• Financial capacity and investment objectives
• Investment experience and risk bearing tolerance

Eligible client categories include adult Nepalese citizens legally registered business entities in Nepal and individuals or organizations permitted to trade securities under prevailing laws.

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Margin Agreements and Valuation Requirements

Margin lending facilities can only be extended following the execution of a formal written or electronic margin agreement. Key terms mandated within the contract include loan limits initial and maintenance margin ratios interest rates applicable fees margin call protocols collateral rights and comprehensive risk disclosures.

The draft outlines operational requirements for account monitoring:

• Daily Market Valuation: Margin accounts will undergo daily revaluation to adjust collateral ratios and margin positions according to current market prices.
• Margin Calls: If account maintenance margin falls below prescribed thresholds service providers must issue formal margin calls to clients.
• Collateral Liquidation: If clients fail to deposit additional cash or collateral within specified timeframes service providers are authorized to implement risk control procedures including the sale of pledged collateral as outlined in the agreement.

Risk Control and Institutional Safeguards

Margin lending institutions will be required to implement automated risk management measures including:

• Continuous daily risk monitoring and automated margin tracking
• Early warning mechanisms and stress testing frameworks
• Monitoring of concentrated credit exposures and internal risk limits
• Separation of Client Assets and Transparent Reporting

The draft strictly mandates the segregation and protection of customer assets. Client cash securities and collateral must be held separately from the operational assets of the provider and cannot be used to fulfill institutional obligations.

Additionally service providers must issue advance disclosures regarding transaction risks interest structures margin call mechanics and potential liquidation scenarios while maintaining regular submission of regulatory financial and risk management reports to SEBON.

For More: SEBON Drafts Margin Lending Transactions Regulations