Nepal Stock Exchange Implements Fourth Amendment to Trading Regulations
The Nepal Stock Exchange (NEPSE) has officially implemented the Securities Trading Operation (Fourth Amendment) Regulations, 2082, ushering in a new era of trading protocols. Effective as of Baisakh 7, 2083, the amendments—approved by the board of directors on Baisakh 3—bring substantial changes to order entry procedures and market volatility safeguards, aimed at enhancing stability and efficiency in the domestic stock market.
Senior Officer Santosh Acharya of NEPSE’s Supervision Branch has directed all trading members to adhere to the revised provisions under Regulations 7 and 12, effective immediately. The most notable inclusion is the introduction of a pre-market order queuing system. Under the new Regulation 7, members are now permitted to enter orders into the system before the official trading session commences. These orders will be queued according to priority and injected into the trading system as soon as the session begins. Crucially, these pre-market orders must remain within a 15 percent price band of the previous day’s closing price.
The amendment also establishes stricter operational boundaries for the trading sessions. During the opening session, all orders must strictly fall within five percent above or below the previous day’s closing price, with the system rejecting any orders outside this range. For continuous trading, the price band is tightened to three percent above or below the prevailing market price, ensuring more controlled price discovery throughout the day.
Perhaps the most significant regulatory update concerns the circuit breaker mechanisms outlined in Regulation 17. Moving away from the previous three-tier system, NEPSE has streamlined the process to protect against extreme volatility. Trading will now be halted for 15 minutes if the NEPSE index moves five percent in either direction within the first two hours of continuous trading. If the index fluctuates by eight percent in either direction at any point during the session, the exchange will close for the remainder of the day.
Furthermore, the new regulations protect against excessive individual stock volatility by stipulating that any listed security whose price shifts more than 15 percent above or below the opening session price will be suspended from trading for the remainder of the day. By simplifying the tiered circuit breaker system and enforcing tighter daily thresholds, NEPSE aims to mitigate panic selling and buying, fostering a more disciplined investment environment for all market participants.
