NEPSE to Implement 15-Minute Weighted Average Closing Price Rule from Chaitra 07

The Nepal Stock Exchange (NEPSE) is set to implement the 15-minute weighted average closing price rule starting tomorrow, i.e., Chaitra 07. This new system aims to minimize price manipulation during the final moments of trading by determining the closing price based on trades executed between 2:45 PM and 3:00 PM. Under this rule, each transaction's influence on the closing price will be proportional to its volume, ensuring that trades with higher volumes have a greater impact.

Previously, the closing price was based on the last traded price, making it susceptible to sudden fluctuations caused by low-volume transactions. The new methodology, however, calculates the weighted average price during the final 15 minutes, making stock prices more stable and transparent.

For example, if a stock, "XYZ," records the following transactions in the designated time frame—100 shares at NPR 100 at 2:45 PM, 200 shares at NPR 102 at 2:50 PM, 50 shares at NPR 99 at 2:55 PM, and 150 shares at NPR 101 at 3:00 PM—the total traded volume will be 500 shares. The sum of the price-volume multiplications will be NPR 50,500, leading to a weighted average closing price of NPR 101. This price will then serve as the opening price for the next trading session.

NEPSE expects this rule to enhance market fairness, prevent last-minute price distortions, and strengthen investor confidence. While its long-term impact remains to be seen, the new system is anticipated to promote transparency and stability in the stock market.