KATHMANDU, April 18: Stakeholders have expressed that the new provision on the extension in limit for fluctuations of share prices at the secondary market can put small investors at risk.
Revising the rule of circuit breaker, Nepal Stock Exchange (NEPSE) has permitted individual companies’ shares to fluctuate by up to 15 percent, compared to the previous limit of 10 percent. The provision will come into effect from Monday.
Chandra Saud, former chief executive officer of the NEPSE, said the extension could invite more risk to the small investors. “As the market is still not mature, the wide fluctuations in prices of shares held by small investors could affect them largely,” he said.
NEPSE eases circuit breaker rules, allowing greater price fluct...
Tilak Koirala, an investor of the share market, has cautioned the authorities that the provision will increase risks to the investors. “It could discourage the investors, while making them sustain huge financial losses.”
Share investors will find several new features at the secondary market when it opens for trading next week, with the market regulator’s revised rule coming into effect from Monday. Under the newly implemented revised ‘Securities Trading Operation Regulations, 2019,’ NEPSE index has been permitted to fluctuate for up to eight percent.
According to NEPSE, a circuit breaker will be triggered if the market index rises or falls by 5 percent within the first hour of trading. Trading will then be halted for 15 minutes. If, after trading resumes, the index moves by an additional 8 percent, trading will be suspended for the remainder of the day.
Additionally, the fluctuation limit for shares during the pre-opening session has been raised from 2 percent to 5 percent. Regulators have also permitted stock brokers to accept ‘after market orders.’ Under the new provision, investors can place buy or sell orders at any time even after the regular trading hours between 11 am-3 pm.
Likewise, the investors can now post the price of the shares they want to purchase or sell at up to three percent higher or lower of the prevailing price.
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