Nepalese commodity market, going through lots of peaks and valleys, is on the verge of completing almost a decade of operation. Genuinely speaking, the market has already witnessed the introduction in the Nepalese market and currently on growth stage. Now, it’s up to the stakeholders, including government (regulation), investors, traders et cetera, to shape the Nepalese commodity market and give a rigid direction.

What is the need of the moment for Nepalese commodity market? How can the responsible stakeholders streamline the entire commodity sector in Nepal? What initiatives are required to sustainably operate this form of market in Nepalese financial industry and establish the market as one of the major components of financial regime? All these queries have been the major issues being discussed and thought of in Nepalese financial sector these days. In an attempt to identify the major catalysts required to streamline the Nepalese commodity market at the moment, this article shall endeavor to scrupulously assess the major associated variables in the following sections.

In fact, since the inception of commodity market in Nepal, as all the market participants are aware, the commodity market has been solely being operated only under the law of land and other governing guidelines/policies, for instance, Anti-Money Laundering (AML) guidelines. Under such stance, the regulation, undoubtedly, is the life-blood for commodity market at this point of time. In lack of regulation, as many market operation modules and mechanisms are left unattended, the commodity market has not been able to par itself in line with international standard. Significant issues to be addressed, like, capital requirement, software standardization or uniformity et cetera, are the key factors being not attended as a result of non-availability of regulation. So, considering all these factors and looking forward for the future of commodity market, regulation is desperately and urgently required.

Beyond regulation, a strong regulatory and supervisory body, in terms of equipments support, sound human resource with presence of overall infrastructure is indispensable. Despite, for now, Securities Exchange Board of Nepal (SEBON), is the proposed regulatory body for Nepalese commodity market, in absence of regulation; the market is not being monitored by SEBON.

 If we minutely assess current practices in Nepalese commodity market in terms of commonality of business operation module, discrepancies could be easily observed from exchange to exchange. Be it pricing of commodities, fees and commissions regime or software standards, the market is not witnessing a common ground for all these factors. Thus, what we need to promote for a healthy and competitive market is standardization and uniformity of all these criteria.

 ‘There is lot to be achieved in Nepalese commodity sector.’ Every market participants are strongly arguing in favor of this statement. If we look at the range of services and products being offered by the market, we could find speculation as the major business product or investment alternative being facilitated to the investors or traders. To realize the true sensation of commodity market, the system urgently needs to address warehousing mechanism, eventually promoting delivery of commodities. Once the warehousing mechanism comes into effect, the market would be able to facilitate storage facilities for various commodities being traded in the exchange platform, initiate warehouse receipt based transactions, which in turn could promote participation of banking and financial intermediaries in the system. It shall not only broaden the scope of commodity market, but invite investors from financial sectors promoting hedging, financing and deliveries.