NEW DELHI:
Sebi
on Friday modified guidelines for
dynamic price bands
for scrips in the derivatives segment in a bid to strengthen
volatility management
and minimise
information asymmetry
.
For scrips excluded from the requirement of price bands, a mechanism of dynamic price bands (or operating range) has been implemented by stock exchanges.
Currently, cash market and futures contracts start with a price band at 10 per cent of the previous day’s closing price, which can be adjusted by 5 per cent during the day if there are at least 25 trades involving 5 unique client codes (UCCs) on each side at or above 9.9 per cent.
A 15-minute cooling-off period follows each adjustment, during which trading continues within the current band.
Based on feedback, Sebi has modified these rules, enhancing the conditions to 50 trades, 10 unique UCCs, and 3 trading members on each side for adjustments, according to its circular. When conditions for adjusting the price bands are met in either the cash market or current month futures contracts on any exchange, the price band will be adjusted for the scrip and all its futures contracts across all exchanges after the cooling-off period.
