NEPSE and BLOCKCHAIN

The Nepal Stock Exchange Limited (NEPSE) is the only stock exchange of Nepal, established with the basic objective to impart free marketability and liquidity to the government and corporate securities by facilitating transactions in its trading floor through member, market intermediaries, such as brokers, market makers, etc. NEPSE is centralized and controlled by the Securities Board of Nepal (SEBON). With this centralized control, today, the traders find it rather difficult to trust the entire buying and selling process.

The major issues identified by the traders are:

• Centralized system: NEPSE is entirely controlled and centralized by NEPSE.
• Difficult to trust because of the opaque system
• Lack of public ledger to understand the pricing of the stocks
• Various errors in the system

While there are various scopes for improvements, blockchain experts believe that there is a single solution for the countless problems- Blockchain. Blockchain ensures the decentralization of the system and the process and ensures safety and transparency as the recorded data is unalterable by a single individual.

Blockchain is a global online database that anyone with the internet can access. Unlike other traditional databases owned by the central bodies, blockchain is a distributed ledger that is open to anyone and is controlled by a network of personal computers. The built-in security in blockchain saves a lot of costs as well. One of the examples of data safety, transparency is the regulation of Bitcoin-that hasn’t been hacked ever.

Implementation of blockchain would help bring the following changes in the trading system of Nepal:

• Cost-saving
• Open and transparent system
• Distributed ledger
• Immutable trading

What is even more exciting is that the government or the SEBON doesn’t need to outsource the project abroad, they can simply ask the developers in Nepal to develop a system for them. NEPSE should definitely focus on developing the open-source blockchain system. There are several companies out there that work in blockchain technology.