The Nepal Stock Exchange (NEPSE) halted trading for 20 minutes on Thursday after the benchmark index surged by 4 percent within the first three minutes of market opening.
During this period, the NEPSE index rose by 102.41 points to reach 2,662. With the 4 percent rise triggering the first circuit breaker, trading was temporarily suspended and resumed trading at 11:23 a.m.
Investor confidence soared after Nepal Rastra Bank lifted the cap on margin lending. Investors had long been demanding the removal of the lending limit, arguing that it had constrained market growth. A taskforce formed by the government to recommend capital market reforms had also advised scrapping the margin lending ceiling.
In line with international practice and market needs, NEPSE introduced the circuit breaker system on April 2, 2019. Under this mechanism, trading can be halted up to three times a day depending on the level of fluctuation in the market index.
If the index rises or falls by 4 percent within the first hour of trading (11:00 a.m. to 12:00 p.m.), trading is suspended for 20 minutes. A 5 percent fluctuation during the second hour (12:00 p.m. to 1:00 p.m.) triggers a 40-minute halt. If the trend continues, a 6 percent change during or after the third hour (1:00 p.m. to 3:00 p.m.) leads to a full-day trading suspension.
Before the first circuit breaker was triggered, transactions worth more than Rs 275.6 million had been recorded on NEPSE.
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