NEPSE to bring new Circuit Breaking procedure into practice from next week; Two methods to select from

NEPSE is on its way to change the existing circuit breaking system. NEPSE has presented to SEBON (Securities Board of Nepal), which it has to choose from to put into practice. Both the methods have been approved by the Board.

As per the current method used by NEPSE, if index fluctuates (rise or fall) by 3% within the first hour than circuit break of 15 minutes is applied. If the index fluctuates by 4% within first 2 hours than break of 30 minutes is applied and all transaction will be suspended if the market fluctuates by 5% at any point in time.

Option 1

According to the first method a circuit will be applied for 15 minutes if the NEPSE index fluctuates by 4% during the first hour of transaction. Similarly, a circuit break of 30 minutes if flucuation of 5% occurs within 2 hours of market opening. Finally, the market will be closed if the index fluctuates by 6% at any point during the trading hours.

Option 2

Similarly, according to the second method a circuit will be applied for 20 minutes if the NEPSE index fluctuates by 4% during the first hour of transaction. A circuit break of 40 minutes if flucuation of 6% occurs within 2 hours of market opening. Finally, the market will be closed if the index fluctuates by 8% at any point during the trading hours.

NEPSE will be deciding on which method to procceed by this week and will be implementing from next.