By: ABP News Bureau | Updated at : 11 Apr 2023 11:41 PM (IST)
The framework aims to streamline price band discovery on the secondary market. ( Image Source : Getty )
The Securities and Exchange Board of India (SEBI) on Tuesday announced the new framework for fixing the price band for trading in share market on the first day of listing after an IPO. The framework aims to streamline price band discovery on the secondary market.
According to SEBI's circular, the decision has been taken after discussions with stock exchanges and SEBI's Secondary Market Advisory Committee (SMAC).
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Several stock exchanges hold call auction sessions when a stock is about to trade for the first time following its IPO. It's possible that the equilibrium price or found price following such call auction sessions will vary depending on the exchange. If the gap between these discovered prices is wide, price bands on different exchanges could be widely off from one another, giving investors a false impression of the price band.
If the difference in these discovered prices is significant, there could be a situation wherein price bands on individual exchanges are far apart from each other, giving an incorrect picture of price band to investors. The new framework would come into force after 60 days on June 10.
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