Starting a brokerage from Nepal

The Act Restricting Investment Abroad, 2021, Act No. 11 of 2021 BS, applies under section 1(2) to every Nepali citizen, wherever in the world they live, and to organised institutions established in Nepal. Section 2 defines investment to cover foreign securities such as shares, stock, bonds and units, a partnership in a foreign firm, a foreign bank account, a house or land abroad, and any other investment abroad in cash or kind that the government has not carved out by notice in the Nepal Gazette.

Section 3(1) then says that there is to be no investment abroad of any kind, and section 3(2) lets the government grant exemptions by notice in the Gazette, fixing their type, limit, period and conditions. Under section 4, a breach is punishable with a fine based on the amount invested, imprisonment of up to six months, or both.

For a founder this comes before anything else. Shares in a brokerage company registered in another country are a foreign security, and the Act reaches Nepali citizens who live abroad as well as those at home. The NRB's answers to frequently asked questions list buying foreign securities, taking ownership of a foreign company and opening a foreign bank account among the things the Act stops, and explain that Nepal's current account is fully convertible while its capital account is not. Settle with counsel who may own the offshore company, and with what money, before you shortlist a jurisdiction.

Under section 3 of the Commodities Exchange Market Act, 2074 BS (2017), nobody may run a commodities exchange market or a business connected with one without a licence, and the Securities Board of Nepal is the body that grants it.

In a notice published on 29 January 2023, SEBON said it had not yet licensed anyone to run a commodities exchange market or a related business. Its call of September 2022 for applications to set up an exchange company was on hold under an interim order of the Supreme Court. The Board said it had learned that some firms were dealing in commodities anyway, that running such a business without a licence is illegal and will be acted on, and it asked investors not to trade through unlicensed exchanges or dealers.

If that route opens, it will be an exchange business supervised by SEBON, which is a different thing from an offshore broker that takes the other side of its clients' trades. Check SEBON's current position before relying on it.

A notice published on 9 September 2021 said that cryptocurrency transactions, use and mining of every kind are illegal in Nepal, issued under the Foreign Exchange (Regulation) Act, and that people drawing others into them could defraud the public and would be punished under the law.

The notice of 3 April 2023 went further. It recalled earlier notices going back to 2017 and said that cryptocurrency including stablecoins, non-fungible tokens, digital assets and decentralised finance have no legal recognition in Nepal, are not legal tender and result in investment abroad, which makes transactions in them illegal under both Acts. It addressed people and firms residing in Nepal, every Nepali citizen living outside Nepal, and branches and agencies abroad of firms registered in Nepal, and it named money laundering, fraud, tax evasion and capital flight among the risks.

SEBON's warning of January 2023 about unlicensed commodities dealing, described above, is the market regulator's side of the same picture. The practical lesson for a founder: a brokerage built around Nepali clients' money would run into notices that are already public, so plan the client base with counsel from the start.

For a Nepali citizen the ownership question under the 1964 Act comes first, and because of section 9C, any plan that relies on money moving from Nepal to the offshore company, or into client accounts, needs a lawyer's answer in writing.

On our platform the brokerage is the counterparty to every client trade, whether it keeps a trade in-house or covers it with its liquidity provider, so look for a licence that allows dealing as principal. Pelris is not a liquidity provider and never holds client money.

Before you register anything, work through the payment questions to settle first, and use our guide to licence, capital and running costs to size the budget. Our comparison of where offshore brokers are licensed is a starting point for the shortlist, not a recommendation.

The symbol list covers forex, gold and silver, oil, stock indices, crypto and US stocks, and each instrument carries its own spread, contract size and digits. Because the NRB's crypto notice reaches Nepali citizens abroad too, ask counsel which instruments to list and for whom.

Leverage, margin and negative balance rules will come from your offshore regulator rather than from Nepal, so the platform leaves those settings to you. Leverage is set per account type and per account. The margin engine tracks equity and free margin live, warns at margin call and stops accounts out automatically at the levels you choose, closing the biggest losing position first. Where an account still finishes below zero, an admin can reset it to zero in the CRM, and the adjustment stays on record.

Leads arrive in a pipeline with their source and an assigned agent, and every client has one record holding accounts, money, trades, documents and calls. There are five roles from admin down to sales, and an agent sees only their own book.

For a founder working from Nepal, the compliance side carries the weight. Identity documents are reviewed in the CRM before any withdrawal is paid, which is the natural point for your team to check each client's residence against your terms. Deposits and withdrawals run instantly or through approval, checked against bank and payment details that you configure, which should be the details your licence and your banks have approved. Sensitive staff actions are written to an audit trail. There is no setup fee, the first month is free and after that you pay one flat monthly fee, as set out on the price list.