NEPSE Trading Rules & Mechanics: Hours, T+2, Circuit Breakers, Classes

The Nepal Stock Exchange Limited (NEPSE) is Nepal's sole secondary securities market. It was established in 1993 (2050 BS) and inaugurated its trading floor on 13 January 1994 (29 Poush 2050 BS), evolving out of the earlier Securities Exchange Centre. NEPSE is headquartered in Singha Durbar, Kathmandu, and today runs a fully automated order-driven trading system accessed through licensed stockbrokers and their online Trade Management System (TMS).

NEPSE does not operate in isolation. The Securities Board of Nepal (SEBON), established in 1993, is the apex regulator that licenses market participants and approves NEPSE's trading bye-laws under the Securities Act, 2006 (2063 BS). Clearing and settlement of both cash and shares is handled by CDS and Clearing Limited (CDSC), which also maintains the central dematerialised (demat) depository in which all listed shares are held electronically.

Understanding who does what matters when you trade: NEPSE matches your order and publishes prices, CDSC moves the shares and money, your Depository Participant (DP) holds the shares in your demat account, and SEBON sets the rules. The mechanics below flow from bye-laws that NEPSE and SEBON periodically amend, so always confirm current figures against the official notices before acting.

NEPSE trades five days a week, from Sunday to Friday, and is closed on Saturdays and on public holidays notified by NEPSE. Note that the Nepali working week means Sunday is a normal trading day and Friday is the last session of the week, unlike Western markets that close on the weekend.

A trading day is split into a pre-open session and a continuous (regular) session. During the pre-open session in the morning, investors can enter, modify or cancel orders through their broker or TMS, but no trades are executed yet. NEPSE's system collects all these orders and calculates a single equilibrium opening price for each stock - the price at which the largest volume can be matched - which then becomes the opening rate when regular trading begins.

Continuous trading, where live price discovery and real-time order matching take place, runs from 11:00 AM to 3:00 PM, with a short closing phase at the end of the session. In April 2026, NEPSE and SEBON approved rule changes allowing investors to place orders around the clock (outside trading hours), although those orders are still only executed when the market is open. Exact pre-open and closing timings are set by NEPSE notice and have shifted over the years, so treat any specific minute-by-minute schedule as indicative and verify it against NEPSE's current circular.

When you buy or sell on NEPSE, the trade is not final the instant it matches - it settles on a T+2 cycle, meaning two working days after the trade date. T is the day your order executes; on T+1 brokers clear the trade and CDSC verifies the details; and on T+2 the funds and shares are exchanged, so the buyer receives shares in their demat account and the seller receives the sale proceeds.

A practical consequence is that shares you buy are not yours to re-sell until they settle. If you purchase on a Monday, delivery into your demat generally completes by Wednesday, and only then can those specific shares be sold again. Sellers similarly receive cleared money on the settlement day rather than immediately. Because settlement counts working days, weekends and holidays extend the calendar time between trade and settlement.

This cycle is operated by CDSC under its clearing and settlement bye-laws, using the central depository so that no physical share certificates change hands. Investors should ensure their broker has collected payment (for buys) or that shares are in demat (for sells) so the trade settles cleanly on T+2; failed settlement can attract penalties and, in serious cases, auction of the shortfall.

NEPSE uses two layers of protection against extreme volatility. The first is the individual-stock price band (daily price limit): the price of a single scrip cannot move beyond a set percentage of its previous day's closing price in one session. For years this limit was 10 percent, so a stock could rise or fall by at most 10 percent in a day before hitting its upper or lower circuit. Once a stock reaches its band, its price is capped for the rest of the session even though orders can still be entered.

The second layer is the market-wide (index-level) circuit breaker, which halts trading across the whole exchange when the NEPSE index swings sharply. Under the long-standing framework, a roughly 4 percent index move in the first period triggered a short halt, a larger move (around 5 percent) a longer halt, and a still-larger move (around 6 percent) suspended trading for the rest of the day, with the exact percentage and pause length depending on how early in the session the move occurred.

These thresholds are not permanent - they are set by NEPSE's trading bye-laws and revised periodically. In 2082 BS (2025-26), SEBON approved amendments that widen individual price bands (reported at up to 15 percent) and restructure the index circuit into a simpler tiered system (for example, a percentage swing in the first two hours triggering a short halt and a larger swing later closing the market). Because these numbers were in transition and depend on when NEPSE issues its operational directive, treat every specific circuit-breaker and price-band figure here as dated and confirm the live thresholds on NEPSE's website before trading.

Separate from the daily circuit limit, NEPSE applies a price band to the pre-open session that governs how far a stock's opening price can move from the previous close during equilibrium-price calculation. This stops a handful of aggressive orders from setting a wildly unrepresentative opening rate before continuous trading starts.

During pre-open, NEPSE aggregates every buy and sell order and finds the single price that maximises matched volume - the equilibrium (opening) price. Orders are then matched at that uniform price when the market opens, after which continuous, price-time priority matching takes over for the rest of the session.

The width of this pre-open band has been adjusted in recent bye-law changes. It was historically narrow (around 2 percent) and was widened in the 2082 BS (2025-26) revisions (reported around 5 percent for the pre-open and about 3 percent for early regular trading). As with the circuit breaker, these are policy figures that change with each amendment, so confirm the current band against NEPSE's latest notice rather than relying on a fixed number.

NEPSE grades its listed companies into performance-based classes so investors can quickly gauge quality and disclosure. Although people often speak of 'A, B and Z', NEPSE actually uses four groups: A, B, G and Z. Classification is reviewed periodically (quarterly), and a company can be upgraded or downgraded as its capital, profitability and compliance change, so the class attached to a scrip is not permanent.

Class A is the top tier, reserved for large, well-governed and consistently profitable companies. Typical criteria include paid-up capital of at least Rs 1 arba (Rs 1,000 million / Rs 1 billion), at least three years of listing, a track record of profits and dividends, and holding the annual general meeting (AGM) within six months of the fiscal year-end. Class B firms are the next tier - for example paid-up capital of at least Rs 50 crore (Rs 500 million), at least three years listed, profits in most of the recent years, no accumulated losses, and timely AGMs.

Class G is a holding group for newly listed companies that have not yet completed the seasoning period (around two years) and so cannot yet be judged against the A or B benchmarks. Class Z is the bottom group: companies failing the A, B or G criteria, including those with governance or disclosure failures, non-submission of financial reports, or suspension. A Class A tag signals stronger fundamentals while a Z tag flags elevated risk, making the class a useful but not sufficient screening tool. Always cross-check NEPSE's current official classification list, as thresholds and the number of companies in each class change over time.

Every NEPSE trade carries several charges on top of the share price. The main one is brokerage commission, capped by SEBON on a sliding scale by transaction size. Indicative slab ceilings (effective from Jestha 2081 / 2024) are around 0.36 percent up to Rs 50,000, about 0.33 percent from Rs 50,000 to Rs 5 lakh, roughly 0.30-0.31 percent from Rs 5 lakh to Rs 20 lakh, about 0.27 percent from Rs 20 lakh to Rs 1 crore, and about 0.24 percent above Rs 1 crore. These are ceiling rates, so a broker may legally charge less, and the commission itself is shared between the broker, NEPSE and SEBON.

Two further per-trade charges apply on both the buy and sell side: a SEBON regulatory fee of 0.015 percent of the transaction value, and a flat DP (Depository Participant) charge of about Rs 25 per company per settlement, collected by your DP. These are small on large trades but noticeable on tiny ones, so very small trades are relatively expensive in percentage terms.

Finally, profits are subject to capital gains tax (CGT), withheld at source by the broker on the sell side. For resident individuals trading listed shares, the long-standing rates have been 5 percent for long-term holdings (held over 365 days) and 7.5 percent for short-term holdings (365 days or less), with institutions taxed at 10 percent; some 2025-26 sources report the individual rates rising (toward 7.5 percent and 10 percent). Because CGT is set by the annual budget and Income Tax Act, 2058 (2002), treat the exact rate as fiscal-year-specific and confirm the current-year figure with the Inland Revenue Department before calculating net profit.