The amendment proposal prepared by NEPSE has been approved by the board of directors of the Securities Board of Nepal (SEBON). With the approval, the new system of circuit breaker will be implemented in the market.
What's in the new system?
According to the amended bylaw, the limit of rise or fall in the NEPSE index has now been revised. As per the new system, there will be a first circuit break at 5 percent fluctuation. If the index rises or falls by 5 percent within the first two hours of the commencement of regular trading, the transaction will be suspended for 15 minutes. Earlier, trading was halted for 20 minutes on 4 percent fluctuation. Similarly, if there is 8 percent fluctuation after the first circuit break, market will be closed for the day. At present, the market closes after fluctuation of 6 percent.
Previously, NEPSE had three tiers of circuit breaker system of 4 percent, 5 percent and 6 percent. The new amendment has removed the provision of 4 percent to 5 percent and increases the final limit from 6 to 8 percent. The move is expected to make the market more dynamic and give investors more time to trade.
Although the rules of the overall market index (NEPSE index) have been changed, there has been no change in the price limit on the share trading of individual companies. In the case of listed companies, the existing circuit limit of 10 percent has been retained. This means that the share price of any company can increase or decrease by a maximum of 10 percent in a single day.
The amended rules will be implemented once NEPSE approve the proposal and decide the date of implementation.
