NEPSE Stock Limits Upgraded to 15%; Market to Close at 8% Index Fluctuation

In a landmark move to modernize the capital market, the Nepal Stock Exchange (NEPSE) has officially overhauled its trading regulations, introducing a more flexible and aggressive pricing structure for listed securities. This new rule will be implemented from coming Monday (Baishakh 07) Under the newly implemented "Securities Trading Operation Regulations, 2075 ( Revised Regulation 2082" the traditional 10% daily price cap has been dismantled, allowing individual stocks to fluctuate by up to 15% in a single session. This major shift is expected to significantly increase market volatility while allowing stocks to reach their equilibrium price much faster than under the previous restrictive regime.

The regulatory update also brings a critical change to the pre-open session, which runs daily from 10:30 AM to 10:45 AM. To prevent the frequent "price locks" seen at the market opening, the threshold for price movement during this session has been widened from 2% to 5%. This adjustment is aimed at ensuring that the opening price of a stock is more reflective of actual buying and selling pressure, providing a smoother transition into regular trading hours.

Furthermore, NEPSE has completely restructured the index based circuit breaker system that governs the entire market. Moving away from the old three tier system of 4%, 5%, and 6%, the exchange has adopted a more robust two tier mechanism. Trading will now only pause for 15 minutes if the NEPSE index fluctuates by 5% within the first two hours of trading. If the volatility continues and the index hits an 8% fluctuation at any point during the day, all trading will be suspended for the remainder of the session. These changes align Nepal’s stock market with international best practices, granting investors more room to trade during periods of high momentum.

Summary of the New Circuit Breaker & Price Limit Rules