KATHMANDU, MAY 21, 2012
The Nepal Stock Exchange (Nepse) is preparing to increase trading hours and change circuit breaker rules following complaints from investors.
Investors have been complaining about the less trading hours and ‘unscientific’ circuit breaker system.
According to sources, the capital market will increase trading hours by an hour—from 11 AM to 3 PM—for some time, and extend further to 4 PM. The present trading hours are 12:00 pm to 3:00 pm from Sunday to Thursday.
As far as the circuit breaker rules are concerned, the restrictive measure will be applied only when the index moves 5 percent—either way. Currently, the exchange suspends transaction for 15 minutes if the index goes up/down by 3 percent. In the event of a 4 percent movement, the trading is suspended for 30 minutes. Share transactions are halted for the day the index fluctuates by 5 percent.
Nepse started the circuit breaker system in September 21, 2007. Until August 25, 2008, the market stabilising tool used to be applied on the basis the rise/fall in index points. Since the date, it is applied on the basis of percentage rise/fall. The proposal, however, has to be approved by the Nepse’s board.
Nepse Chairman Jib Nath Dhital also hinted about such a plan, saying that Nepse will address the issues by preparing a fixed set of regulations. “Informal talks on the matter have taken place,” said Dhital. “It is high time that we take a decision.”
Analyst Rabindra Bhattarai welcomed the move, but said changing circuit breaker rules alone cannot ensure smooth trading. “The values of promoter and public shares are considered similar while calculating market capitalisation, which creates anomalies,” he said. “As a result of the valuation of all stocks under the same head, small changes in the share prices of companies like Nepal Telecom, Standard Chartered Bank and Nabil Bank, among others, affect the market index largely.”
Source: The Kathmandu Post
The Nepal Stock Exchange (Nepse) is preparing to increase trading hours and change circuit breaker rules following complaints from investors.
Investors have been complaining about the less trading hours and ‘unscientific’ circuit breaker system.
According to sources, the capital market will increase trading hours by an hour—from 11 AM to 3 PM—for some time, and extend further to 4 PM. The present trading hours are 12:00 pm to 3:00 pm from Sunday to Thursday.
As far as the circuit breaker rules are concerned, the restrictive measure will be applied only when the index moves 5 percent—either way. Currently, the exchange suspends transaction for 15 minutes if the index goes up/down by 3 percent. In the event of a 4 percent movement, the trading is suspended for 30 minutes. Share transactions are halted for the day the index fluctuates by 5 percent.
Nepse started the circuit breaker system in September 21, 2007. Until August 25, 2008, the market stabilising tool used to be applied on the basis the rise/fall in index points. Since the date, it is applied on the basis of percentage rise/fall. The proposal, however, has to be approved by the Nepse’s board.
Nepse Chairman Jib Nath Dhital also hinted about such a plan, saying that Nepse will address the issues by preparing a fixed set of regulations. “Informal talks on the matter have taken place,” said Dhital. “It is high time that we take a decision.”
Analyst Rabindra Bhattarai welcomed the move, but said changing circuit breaker rules alone cannot ensure smooth trading. “The values of promoter and public shares are considered similar while calculating market capitalisation, which creates anomalies,” he said. “As a result of the valuation of all stocks under the same head, small changes in the share prices of companies like Nepal Telecom, Standard Chartered Bank and Nabil Bank, among others, affect the market index largely.”
Source: The Kathmandu Post
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