Nepal’s capital market has recently undergone a transformative wave of changes, marked by sweeping regulatory reforms and the introduction of a new tiered broker licensing system. Recognising these developments can inspire confidence and a positive outlook for entrepreneurs, financial institutions, and professionals interested in entering this evolving environment.
For entrepreneurs, financial institutions, and professionals considering obtaining a stockbroker license in Nepal, understanding the licensing process and current regulations in 2025 is essential. Appreciating these requirements can help you feel more confident and ready to seize opportunities in the market.
The comprehensive guide explains the licensing process and requirements for obtaining a stockbroker license in Nepal in 2025, including key deadlines and procedural steps, to help you feel supported and confident as you navigate each stage and reduce uncertainty along the way.
Who Regulates Stock Brokers in Nepal?
The Securities Board of Nepal (SEBON) is the apex regulator for Nepal’s capital market. Created under the Securities Act 2006, SEBON is responsible for:
- Licensing stockbrokers, stock dealers, and market makers
- Supervising market conduct
- Protecting investors and maintaining market integrity
No entity may operate as a stockbroker without first obtaining a licence from SEBON and then becoming a member of the Nepal Stock Exchange (NEPSE).
The licensing framework, mainly outlined in the Securities Businessperson Regulations 2064, provides a clear overview of the steps and requirements, helping you understand the process more effectively.
The 2022 shift to a three-tier licensing structure marked a major change, making it essential to understand these new categories and how they can empower your licensing options and strategic decisions.
What Is the Three-Tier Licensing Structure Introduced in 2022?
The three main categories introduced in 2022-Limited Transaction Broker, Full Transaction Broker, and Stock Dealer- each have distinct capital and activity requirements, aiding you in choosing the right license.
A Limited Transaction Broker is an accessible entry-level licence designed to introduce new professionals to the market. It allows the licence holder to execute basic buy and sell orders on behalf of clients, but with a more limited operational scope than the higher tiers.
The key features are:
- Minimum paid-up capital of Rs 20 Crore (two hundred million)
- Annual renewal fee of Rs 1.5 lakh
A Limited Transaction Broker licence is an entry-level licence that enables the licence holder to execute basic buy and sell orders on behalf of clients, emphasising its straightforward, manageable scope compared to higher-tier licences.
A Full Transaction Broker holds the standard brokerage licence. These brokers can provide a full range of trading services to both retail and institutional clients and interact fully with the depository system.
The main requirements are:
- Minimum paid-up capital of Rs 60 Crore (six hundred million)
- Annual renewal fee of Rs 3 lakh
This is the typical choice for firms that want to operate a comprehensive brokerage platform.
A Stock Dealer represents the highest tier. Rather than acting only as agents, stock dealers:
- Trade mainly for their own account
- Can provide market-making functions
- May underwrite shares of listed companies
- Can access the NEPSE trading interface directly, without going through another broker
To qualify, an entity must meet a substantially higher funding threshold, with a minimum paid-up capital of Rs 1.5 billion (1,500 million), emphasising the stability and professionalism expected of stock dealers.
The three-tier structure is intended to encourage competition and transparency, fostering trust, while ensuring that the scale of operations is matched by adequate capital and risk-bearing capacity.
Who Can Apply for a Stock Broker’s Licence in Nepal?
An applicant must be a company incorporated in Nepal under the Companies Act 2006, which sets clear eligibility standards and provides confidence that the applicant can qualify.
Typically, applicants are formed as private or public limited companies. Foreign institutions may participate through Nepal-incorporated subsidiaries, provided they comply fully with local laws, including the requirement for an active local management presence.
What Conditions Apply to Promoters and Directors?
SEBON applies a strict fit-and-proper test to all promoters and proposed directors. They must:
- Have a clean legal record
- Be of sound mind and good character
- Have no history of serious financial misconduct
Individuals are disqualified if they are undischarged bankrupts, have been convicted of offences involving moral turpitude, are denylisted by the Credit Information Bureau, or have defaulted on obligations to financial institutions.
What Capital Requirements Are Essential for a License?
The paid-up capital must:
- Be fully deposited in a separate bank account
- Be verified through a bank certificate submitted with the application
- Remain unencumbered and always maintained at or above the required minimum for the licence category
Dropping below the minimum capital level constitutes a regulatory breach.
What Infrastructure Must a Broker Have?
SEBON requires a minimum level of operational infrastructure to ensure a secure and professional service. This includes:
- Adequate office space (at least two hundred square feet in the regulations, although in practice most brokers use larger premises)
- Dedicated trading terminals connected to the NEPSE system
- Reliable internet and communication facilities
- Suitable physical and data security measures
- Qualified staff, including authorised representatives with the necessary approvals and training
What Is the Step-by-Step Process for Obtaining a Licence?
The licensing process usually takes around 8 to 12 months, assuming the application is well prepared and issues are addressed promptly.
Before applying for a stockbroker licence, ensure your company meets the basic eligibility criteria set by SEBON.
Your company must be registered in Nepal under the Companies Act 2006 and meet the minimum paid-up capital requirements based on the licence category (limited transaction broker, full transaction broker, or stock dealer).
Additionally, the company must have a clean regulatory history, with no major violations or faults. The promoters and directors must have the required qualifications, a clean legal record, and the necessary professional experience to run a licensed brokerage.
Once eligibility is confirmed, clearly prepare the required documents for your application. These documents include company registration details (Certificate of Incorporation, Memorandum and Articles of Association, PAN registration, and tax clearance certificate). This clarity will help applicants feel more confident and reduce uncertainty in the process.
Also, provide bank statements to prove your paid-up capital. For promoters and directors, you need detailed biodata, including educational qualifications, professional experience, citizenship certificates, and police clearance reports. Emphasising thoroughness encourages applicants to feel responsible and diligent in their preparation.
Additionally, prepare a comprehensive business plan that outlines your operations, infrastructure, and details of your compliance and risk management policies. This focus on completeness will help applicants feel well-prepared and confident in their submission.
Once all documents are prepared, submit your application to the Nepal Stock Exchange (NEPSE). NEPSE will evaluate your company carefully, considering market needs and your infrastructure’s capacity, to ensure a good fit.
They will review your infrastructure, operational plans, and business models to ensure a fair assessment. If NEPSE is satisfied, they will issue a recommendation letter for your application. This process typically takes 30 to 45 days, providing transparency and confidence.
After obtaining the NEPSE recommendation, you are encouraged to submit your complete application to SEBON. Providing all required documents, including the application form (Schedule-1) and the NEPSE recommendation letter, helps ensure a smooth review process and demonstrates your commitment to compliance.
SEBON will review your application and ensure all requirements are met before proceeding to the next steps, ensuring a fair and diligent review process.
Upon receiving initial approval from SEBON, recognise your role in establishing the required infrastructure within six months to ensure compliance and operational readiness.
This includes securing office space that meets SEBON’s standards, setting up trading terminals and systems connected to the NEPSE platform, and ensuring communication infrastructure is in place to facilitate operations.
You must also implement comprehensive security arrangements for both your office and digital systems, reinforcing your responsibility to maintain regulatory compliance and protect assets.
After the infrastructure is set up, SEBON will conduct an on-site inspection within 30 days. During the inspection, SEBON will assess the physical infrastructure, including office space and technology systems.
They will also review your internal procedures, systems, and overall compliance readiness. SEBON will evaluate the management team’s ability to operate the brokerage firm efficiently and in compliance with all regulatory requirements.
If the on-site inspection is satisfactory, SEBON will issue your stock broker licence, recognising your compliance and progress. You will need to pay a license fee of Rs. 25,000 before receiving your official license in Schedule-6 format.
Once the licence is issued, you can begin operations immediately. To stay compliant, renew your license annually and adhere to all regulatory requirements to support your ongoing success as a licensed stockbroker.
What Ongoing Compliance Duties Must Bokers Meet?
Obtaining the licence is only the beginning; ongoing compliance duties are vital for maintaining your professional standing and operational legitimacy in Nepal.
Annual Renewal Work
Broker licences must be renewed each year within three months of the end of the fiscal year. To renew, the broker must:
- Pay the applicable annual renewal fee for its category
- Submit audited financial statements
- Confirm continued adherence to the capital requirement
- Provide a formal compliance certificate
Failure to meet renewal requirements on time can result in the suspension of trading activities, making timely renewals essential to avoid disruptions.
Regular Reporting
Brokers must submit:
- monthly reports on trading volumes, financial position, and regulatory compliance
- quarterly reports containing financial data, risk assessments, and internal audit findings
- annual reports with full audited accounts, compliance statements, and a business review
In addition, they must notify SEBON promptly of any material events, such as changes in ownership, board composition, or major operational changes.
Capital and Controls Monitored
Maintaining minimum paid-up capital is crucial; meeting this requirement helps brokers feel a sense of achievement and responsibility in upholding market stability.
Brokers are also subject to:
- annual statutory audits by external auditors
- periodic SEBON compliance audits examining internal controls, reporting accuracy, and regulatory adherence
Staff, particularly authorised representatives and key personnel, must complete continuing education to remain up to date with regulatory and market developments.
Conclusion
Obtaining a stock broker licence in Nepal in 2025 is both a major opportunity and a serious undertaking. The three-tier licensing system offers flexibility for firms with distinct levels of capital and ambition.
For those able to meet the requirements and maintain ambitious standards, Nepal’s expanding capital market offers considerable potential.
Licensed brokers are likely to remain central players in the country’s financial development for years to come.
