NEPSE Finally Rolls Out After Market Order (AMO) Facility, Boosting Trading Flexibility for Investors

The Nepal Stock Exchange (NEPSE) has officially launched the 'After Market Order' (AMO) facility on its online trading system (TMS) starting this Thursday. This long-anticipated feature allows investors to place buy and sell orders for securities even outside the regular trading hours of 11 AM to 3 PM. While this move is a significant step towards enhancing market accessibility and convenience for investors, particularly those with busy schedules during office hours, it also highlights the slow pace of technological adoption within NEPSE.

The introduction of AMO by NEPSE comes notably late, especially considering that a private sector brokerage firm, Nasa Securities (Broker No. 58), had already implemented a similar facility for its clients as early as Baisakh 10 (April 22). It took NEPSE an additional 108 days, or approximately three months and eighteen days, to integrate this technology into its own system. This delay underscores a persistent concern among market participants regarding the agility and responsiveness of the national stock exchange in adopting modern trading functionalities.

Understanding After Market Orders (AMO)

The After Market Order system is designed to provide greater flexibility to investors who might be unable to monitor the market or place orders during the standard trading window. This facility aims to capture potential trading interest that arises outside market hours, allowing investors to prepare their positions in advance.

Key features of NEPSE's newly introduced AMO facility include:

• Price Limits: Investors can place 'limit orders' with a permissible fluctuation of up to 15% from the previous day's closing price. This ensures a degree of control over the execution price, preventing orders from being filled at extreme values.
• Automated Processing: Orders placed within a 3% price limit of the previous day's closing price will be automatically transmitted to the exchange during the 'pre-open session' before the market officially commences. For orders with prices outside this 3% range, the system will only process them once a matching price is found during regular trading hours. This tiered approach helps manage volatility during the pre-open phase.
• Verification and Restrictions: The system incorporates immediate checks to ensure the integrity of transactions. When an order is placed, it verifies if the buyer has sufficient collateral and if the seller holds the required shares in their Demat account. Importantly, 'market orders'—transactions placed without specifying a price—will not be available under the AMO facility, emphasizing a preference for limit orders to maintain price stability.
• Day Validity: All AMO orders are valid for a single trading day only. If an order is not executed by the end of the trading day, it will be automatically canceled. This 'day validity' ensures that stale orders do not clutter the system and that investors must re-evaluate their positions daily.

Challenges and User Experience

Despite the positive implications of AMO, the initial implementation by NEPSE reveals some user interface (UI) complexities, particularly concerning order modification and cancellation. According to NEPSE's system, an order can only be modified or canceled when it is in a 'pending' state, prior to being sent to the exchange. Once an order has been transmitted to NEPSE's central system, it cannot be altered or withdrawn directly from the TMS 'After Market' section. Instead, investors are required to navigate back to the 'Order Book' to manage such orders. This cumbersome process suggests that NEPSE's UI still has room for improvement in terms of user-friendliness and intuitive design, a point of frequent criticism from the investor community.

Broader Market Implications

The introduction of AMO is a welcome development for the Nepali capital market, signaling NEPSE's gradual embrace of modern trading practices. It is expected to increase investor participation by accommodating those who are constrained by time during regular market hours. This enhanced flexibility could potentially lead to a more active market, as investors can react to global cues or personal financial decisions outside the traditional trading window. However, for the full benefits of such advancements to materialize, NEPSE must continue to refine its systems, prioritize user experience, and accelerate the adoption of other long-demanded features. The market looks forward to further enhancements that will truly align NEPSE with international best practices and serve the growing needs of its investor base.