How the Nepal Share Market Works - Easy Explanation

The Nepal Stock Exchange, or NEPSE, is located in Kathmandu and serves as Nepal's only securities market.Trading takes place from Sunday through Thursday, following Nepal's work week.The market operates from eleven AM to three PM Nepal time, providing a four-hour trading window.All trading activities are conducted through NEPSE's electronic trading system, which handles order entry, matching, and execution.Licensed brokers play a crucial role in the trading process, executing buy and sell orders on behalf of investors.To participate in trading, investors must have a demat account and work with a licensed broker who can execute trades on their behalf.The Nepal Stock Exchange has several key market participants that work together to facilitate trading.Investors are the primary participants who buy and sell securities. Brokers act as intermediaries, executing trades on behalf of investors.Market makers help maintain liquidity, while SEBON, the regulatory body, oversees and regulates market activities.To start trading in NEPSE, investors need three essential accounts.A bank account for fund transfers, a demat account through CDSC for holding shares electronically, and a trading account through TMS for executing trades.Several documents are required to open these accounts. Let's review the essential requirements.Brokers charge commission fees that vary based on the transaction value. Let's examine the fee structure.Commission rates range from zero point seven percent for smaller transactions to zero point four percent for larger trades above two million rupees.The NEPSE uses a fully automated trading system that matches buy and sell orders based on strict priorities.The matching engine pairs orders based on price priority first, then time priority for orders at the same price.NEPSE follows a T+2 settlement cycle, meaning trades are fully settled within two working days after the trade date.Investors can place orders either directly through their TMS login or with broker assistance.To prevent excessive volatility, NEPSE implements a daily circuit breaker that limits price movements to plus or minus 10 percent.Let's review the key features of NEPSE's trading system.This concludes our overview of the NEPSE trading process and settlement system.