However, the model has not been finalized yet, said a NEPSE official to Merolagani. NEPSE is preparing to implement the circuit breaking model after finalization from next week.
Earlier, Securities Board of Nepal (SEBON) had directed NEPSE to develop the best suited system to amend the current mechanism.
Following the direction, NEPSE developed and endorsed a system through its BOD before submitting it to SEBON.
NEPSE proposal submitted to SEBON has suggested two timings for the circuit break. In the first proposal, NEPSE suggested the current system with changes in market fluctuation percentage. In the second proposal, NEPSE suggested to amend percentage of market fluctuation as well as time of trading suspension.
According to the first proposal, if the market fluctuates by 4 percent within the first hour, trading should be suspended by 15 minutes. Similarly, if the market fluctuates by 5 percent within two hours of trading, trading should be suspended by 30 minutes. Similarly, if the market fluctuates by 6 percent in any given time, the trading should be suspended for the whole day.
Similarly, in the second proposal, NEPSE suggested 20 minutes of trading suspension upon 4 percent volatility in first hour trading. Likewise, it suggested 40 minutes of trading suspension upon 6 percent volatility in two hours trading. Furthermore, NEPSE suggested whole day suspension if the market fluctuates by 8 percent in any given time.
As per the current mechanism, NEPSE suspend trading for 15 minutes if the market fluctuates by 3 percent in first one hour, for 30 minutes if the market fluctuates by 4 percent in first two hours and for whole day if the market fluctuates by 5 percent in any given time.