The Nepal Stock Exchange (NEPSE) has updated its circuit breaker rules for secondary market trading after facing criticism that the previous system disrupted smooth market operations.
Following approval from the Securities Board of Nepal (SEBON) on Monday, the revised Securities Trading Bylaws have come into effect. Under the new framework, circuit breakers will be triggered only twice a day, and the allowable range for share price fluctuations has been expanded.
A circuit breaker is a regulatory tool that temporarily halts trading during sharp market movements. NEPSE applies both stock-specific and index-based circuit breakers.
Under the revised rules, trading will be suspended for 15 minutes if the market index rises or falls by 5% within the first hour. If the index then moves an additional 8% after trading resumes, the market will be closed for the rest of the day.
Previously, the system was stricter. A 4% movement triggered a 20-minute halt, a 5% change led to a 40-minute suspension, and a 6% fluctuation resulted in a full-day closure.
The updated bylaws also increase the daily price fluctuation limit for individual stocks to 15%, up from the earlier 10%.
This is not the first relaxation of such rules—SEBON had introduced similar flexibility in April 2019. The latest revision comes after strong investor backlash following the March 5 election trading session, when three consecutive circuit breakers shut down the market within an hour.
Additionally, the price fluctuation limit during the pre-opening session has been raised from 2% to 3%. Regulators have also introduced “after market orders,” allowing investors to place buy or sell orders between 6 PM and 6 AM.
According to NEPSE spokesperson Murahari Parajuli, this provision is intended to make trading more accessible, especially for Nepali investors living abroad.
