SEBON Broker Classification Policy 2083: New 4-Tier Structure & Risk-Based Capital & Tech Regulations
29th September 2026, Kathmandu
The Securities Board of Nepal (SEBON) proposes a 4-tier classification system for stockbrokers under the Securities Broker Strengthening Policy 2083.
Dividing brokers into Stock Dealers, Full-Service, Execution-Only, and Specialized categories, the framework introduces risk-based capital requirements, strict cybersecurity protocols, algorithmic trading controls, and enhanced investor asset protection.
SEBON Broker Categorization Policy 2083: 4-Tier Structure. The Securities Board of Nepal (SEBON) has introduced the “Securities Broker Strengthening Policy 2083”, aimed at modernizing Nepal’s capital market.
Under this proposed policy, stockbrokers will be categorized into four distinct classes based on their paid-up capital, service diversification, risk-bearing capacity, and institutional infrastructure.
1. Broker Categorization & Permitted Services
SEBON’s proposed framework divides stockbrokers into Class ‘A’, ‘B’, ‘C’, and ‘D’ to clearly separate core trading services from high-risk financial products:
2. Risk-Based Capital & Strict Renewal Evaluation
To ensure financial stability, SEBON is tying capital requirements directly to operational exposure:
Activity-Specific Capital: Brokers engaging in high-risk services (e.g., margin trading, short selling) must maintain additional activity-specific capital above their baseline requirement.
Capital Adequacy & Exposure Limits: Strict limits will be enforced regarding liquidity ratios, large exposures, and overall risk management parameters.
Performance-Based Renewal: License renewals will no longer be routine administrative tasks. Renewals will depend on a rigorous evaluation of the broker’s capital adequacy, compliance record, grievance redressal efficiency, IT infrastructure, and cybersecurity posture.
3. Asset Protection & Ownership Transparency
The policy places strong emphasis on investor security and structural corporate governance:
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Segregated Client Accounts: Brokerages must strictly segregate client funds and securities from corporate proprietary assets.
Beneficial Ownership Controls: Enhanced monitoring will target ultimate beneficial ownership (UBO) to prevent market concentration by single individuals, families, or close-knit groups, alongside strict cross-ownership checks.
Mergers & Acquisitions: Financially weaker or undercapitalized brokerages will be encouraged to consolidate via M&A frameworks.
4. Cybersecurity Protocols, Algorithmic Trading & ‘Kill Switch’
Given the increasing reliance on online trading platforms, SEBON is introducing comprehensive IT controls:
Mandatory IT Standards: Brokerages must appoint a Chief Information Security Officer (CISO), implement Multi-Factor Authentication (MFA), undergo regular security audits, and comply with strict data protection guidelines.
Emergency ‘Kill Switch’: Brokers and regulators will be equipped with an automated “Kill Switch” to immediately halt market operations during major system failures or cyber threats.
Pre-Approval for Algo Trading: Algorithmic and High-Frequency Trading (HFT) systems will require prior regulatory approval, pre-trade risk controls, and real-time intervention capabilities.
5. Transition Period & Professional Certification
To facilitate a smooth structural migration, SEBON plans to provide existing brokerages with a structured transition window to upgrade their capital, technology, and internal controls before full reclassification.
Additionally, brokerage personnel will be required to hold mandatory professional certifications across specialized domains such as dealer operations, margin lending, algo trading, and cybersecurity.
For more: SEBON Broker Classification Policy 2083
