Stakeholders have raised concerns that the revised provision allowing wider fluctuations in share prices in the secondary market could expose small investors to greater financial risks.
The Nepal Stock Exchange (NEPSE) has updated its circuit breaker rules, increasing the allowable price fluctuation for individual company shares from 10 percent to 15 percent. This new provision is set to come into effect from Monday.
Chandra Saud, former chief executive officer of NEPSE, warned that the expanded limit could heighten risks, particularly for small investors. He noted that the market is still developing, and sharp price movements could significantly impact those with limited investment capacity.
Similarly, share market investor Tilak Koirala cautioned that the change may lead to higher volatility, potentially discouraging investors and exposing them to substantial financial losses.
With the revised ‘Securities Trading Operation Regulations, 2019’ coming into force, several new features will be introduced when the secondary market reopens next week. The NEPSE index will now be allowed to fluctuate by up to 8 percent.
Under the updated rules, a circuit breaker will be triggered if the market index moves by 5 percent within the first hour of trading, resulting in a 15-minute suspension. If the index then shifts by an additional 8 percent after trading resumes, the market will be closed for the rest of the day.
The pre-opening session fluctuation limit has also been increased from 2 percent to 5 percent. Additionally, stockbrokers are now allowed to accept after-market orders, enabling investors to place buy or sell orders even after regular trading hours (11 am to 3 pm).
Furthermore, investors can now set bid or ask prices within a range of up to 3 percent above or below the prevailing market price.
