NEPSE implements new average price calculation to prevent market manipulation
NEPSE, the Nepal Stock Exchange, is gearing up to implement a new approach to determining the final price of listed companies. This innovative method involves calculating the average price based on transactions completed in the last 15 minutes of trading. The introduction of this new system aims to tackle the issue of significant price fluctuations typically observed towards the end of the trading session.
NEPSE spokesperson Murahari Parajuli emphasized the need for this new method, citing the drastic price swings that often occur during the closing period. He revealed that the implementation of this approach is pending approval from the NEPSE board of directors, indicating a potential rollout date of March 23. This initiative followed a successful trial run conducted after the proposal from the board of directors.
The Securities Board of Nepal granted approval for the introduction of average price calculation as proposed by NEPSE, further signaling a positive step towards market stability. The essence of this new method lies in deriving the average closing price by dividing the total transaction amount from the final 15 minutes by the number of shares exchanged during that interval. Each transaction during this timeframe is meticulously considered and gathered to ascertain the total amount traded and the corresponding number of shares.
The resultant calculated price is slated to function as the opening price for the subsequent trading day, significantly streamlining trading operations. Market experts and investors alike have praised this move, voicing optimism about its potential impact on market dynamics. Renowned stock analyst Chhotelal Rauniyar hailed the decision, highlighting its alignment with global best practices and underscoring its potential to curb market manipulations stemming from abrupt price fluctuations.
Rauniyar expressed satisfaction that investor demands for a more stable and predictable market environment have been met. Moreover, he emphasized that embracing such practices mirrors international standards and will undoubtedly foster greater market stability over time. Another stock analyst, Mukti Aryal, echoed Rauniyar’s sentiments, showcasing confidence in the new system’s ability to benefit the market and address longstanding concerns within Nepal’s trading landscape.
Overall, the impending implementation of this new pricing mechanism represents a significant step towards enhancing market efficiency and bolstering investor confidence in NEPSE. By aligning with global norms and embracing innovative approaches, NEPSE is poised to usher in a new era of stability and transparency in Nepal’s stock market.
