KATHMANDU, April 8: The Nepal Stock Exchange (NEPSE) has revised its circuit breaker rules for secondary market trading, responding to criticism that the previous rules hindered smooth trading.
Following approval from the Securities Board of Nepal (SEBON) on Monday, the amended Securities Trading Bylaws have taken effect. Under the new rules, circuit breakers will be triggered only twice a day, and the percentage range for share price fluctuations has been widened.
A circuit breaker is a regulatory mechanism that halts or suspends trading when stock prices experience significant swings. In addition to stock-specific circuit breakers, NEPSE also applies index-based circuit breakers.
According to NEPSE, a circuit breaker will be triggered if the market index rises or falls by 5% within the first hour of trading. Trading will then be halted for 15 minutes. If, after trading resumes, the index moves by an additional 8%, trading will be suspended for the remainder of the day.
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Previously, trading was suspended for 20 minutes if the index crossed a 4% limit for the first time in a day. A 5% rise or fall led to a 40-minute halt, and a 6% fluctuation resulted in a full-day suspension.
The revised bylaws also allow individual company shares to fluctuate by up to 15%, compared to the previous limit of 10%.
This is not the first time SEBON has eased circuit breaker rules—similar flexible measures were introduced in April 2019. The latest revision follows heavy criticism from investors after an incident on the first trading day following the March 5 elections, when NEPSE triggered three consecutive circuit breakers, closing the market within just one hour.
Additionally, the fluctuation limit for shares during the pre-opening session has been raised from 2% to 3%. Regulators have also permitted stock brokers to accept "after market orders."
Under the new provision, investors can place buy or sell orders between 6 PM and 6 AM the next day. NEPSE spokesperson Murahari Parajuli said this change aims to facilitate trading for Nepali investors living abroad.
