NEPSE's New 15-Minute Weighted Average Closing Price Rule Explained

Kathmandu, February 19, 2025 - The Nepal Stock Exchange (NEPSE) has recently introduced a new rule for determining the closing price based on the last 15 minutes of trading. Under this rule, the weighted average price from 2:45 PM to 3:00 PM will set the closing price, which will then be used as the opening price for the next trading day.

How the Rule Works:

The new regulation aims to reduce price manipulation in the final moments of trading. Here's how it functions:

• Time Frame: Only transactions from 2:45 PM to 3:00 PM are considered for setting the closing price.

• Weighted Average: Each trade's impact on the closing price is proportional to its volume. The price at which more shares are traded will have a greater influence on the average.

Example:

Let's assume for a stock named "XYZ", the trading during this 15-minute period looked like this:

• At 2:45 PM, 100 shares were traded at NPR 100.

• At 2:50 PM, 200 shares were traded at NPR 102.

• At 2:55 PM, 50 shares were traded at NPR 99.

• At 3:00 PM, 150 shares were traded at NPR 101.

  Calculation:

Total Volume = 100 + 200 + 50 + 150 = 500 shares

• Sum of (Price * Volume):

• (100 100) + (102 200) + (99 50) + (101 150) = 10000 + 20400 + 4950 + 15150 = 50500

• Weighted Average Price:
  Closing Price=50500500=101 Closing Price=50050500​=1 01

• Therefore, the closing price for "XYZ" on that day would be set at NPR 101, which would be used as the opening price for the next trading day.

• This rule is expected to bring transparency and fairness to the stock market, potentially increasing investor confidence. However, its implementation and effectiveness remain to be observed in the future.