Sebi proposes frequent price-band mechanism for shares listed on a number of exchanges
In a session paper launched on Thursday, the market regulator stated it has noticed situations the place illiquid shares develop considerably completely different costs throughout exchanges as a result of circuit limits proceed to be calculated utilizing stale closing costs on exchanges the place no buying and selling happens.
At the moment, inventory exchanges independently apply worth bands primarily based on their very own earlier closing costs. Whereas this works easily for actively traded shares, SEBI famous that it may well create distortions in shares that don’t commerce on one alternate for a number of days.
The regulator illustrated a situation the place a inventory continues to hit higher circuits and acquire worth on one alternate, whereas remaining caught inside an outdated worth band on one other alternate resulting from lack of buying and selling. Over time, this could result in substantial worth divergence between the identical inventory throughout exchanges and should even end in non-trading on one platform.
To deal with the difficulty, Sebi has proposed a harmonised framework for figuring out each the bottom worth used within the pre-open name public sale session and the relevant worth bands.
Beneath the proposal, if a inventory trades on all exchanges or stays untraded on all exchanges on a selected day, every alternate will proceed utilizing its personal newest closing worth for calculating the following day’s worth band.
Nonetheless, if a inventory trades on just one alternate, all different exchanges the place the inventory didn’t commerce can be required to undertake the closing worth from the alternate the place buying and selling occurred for setting the following day’s worth bands and pre-open session base worth.In instances the place a inventory trades on two or extra exchanges however stays untraded on a number of others, the exchanges with out buying and selling exercise will use the closing worth from the alternate that recorded the best buying and selling quantity in that inventory.
The proposals stem from suggestions made by Sebi’s Secondary Market Advisory Committee (SMAC), which mentioned the difficulty throughout its April 2026 assembly.
Sebi has additionally proposed that inventory exchanges enter into agreements or different preparations to facilitate the sharing of closing-price knowledge and guarantee easy implementation of the framework.
The regulator stated the transfer is meant to enhance worth discovery and forestall pointless worth distortions in shares listed on a number of buying and selling venues.
Public feedback on the session paper have been invited till July 2.
