Kathmandu. Kathmandu: The Securities Board of Nepal (SEBON) is to change the circuit breaker system. KATHMANDU: Nepal Stock Exchange (NEPSE) is going to change the ‘circuit breaker’ system used to control the fluctuations in the share market.

NEPSE is going to amend the ‘Securities Trading Operation Regulation, 2075’ and change the limit and time of the current circuit breaker. The Board of Directors has already approved the amendment proposal prepared by NEPSE, said Joint Spokesperson of the Board of Directors Tolakanta Neupane.

The regulation has been changed to ‘circuit breaker’ system in response to the demand of the latest investors. “In response to the current demand, SEBON has made changes to the circuit breaker system to be implemented immediately. An official of the board said.

Investors had been demanding reforms in the ‘circuit breaker’ system in the stock market for a long time, as the ‘circuit breaker’ system was 4 percent, 5 percent and 6 percent. “This arrangement is being made according to the wishes of the investors,” says the Sebon official.

He claims that this will have both positive and negative effects on the market. “Investors will be happy when the market is up. The official says, “Even when the market falls, it will decrease in the same ratio, so there are both negative and positive sides.” ’

According to the proposed new system taken by NEPSE, the first circuit break of 5 percent will be applied in Sebon. If the Nepse index rises or falls within the first two hours of the commencement of regular trading, the transaction will be suspended for 15 minutes.

Earlier, if the stock market rose or fell by 4 percent, trading was stopped for 20 minutes. Similarly, if there is a fluctuation of 8 percent, then all transactions will be completely stopped for that day.  If the index fluctuates by 8 percent in a market that reopens after the first circuit break of 5 percent, trading will be completely stopped for the rest of the day. In the current system, if there is a fluctuation of 6 percent, the trading will be closed for the whole day.

Prior to this, NEPSE had three tiers of circuit breaker system of 4 percent, 5 percent and 6 percent. The new amendment has removed the provision of 4 percent to 5 percent and increases the final limit from 6 to 8 percent.