sebi: Sebi modifies duration for call auction in pre-open session for IPOs

It was observed that during the call auction in pre-open session for certain IPO and relisted scrips, orders were placed at higher prices in large volumes and a significant portion of such orders were cancelled just before the closure of call auction session.

This may have created false demand and supply and possibly manipulated the price of the scrips to the detriment of common investors.

In order to curb the misuse of the call auction session, Sebi has decided to modify the current provisions related to call auction sessions for IPO and relisted scrips and introduce additional surveillance measures at stock exchanges.

According to new modifications, the pre-open session for IPOs will be for a duration of 60 minutes i.e, from 9-10 am, out of which 45 minutes will be allowed for order entry, order modification and order cancellation and 10 minutes for order matching and trade confirmation.The remaining 5 minutes will be the buffer period to facilitate the transition from pre-open session to the normal trading session.The session will close randomly during the last ten minute of order entry, which is anytime between 35th and 45th minute of the order entry window. Such random closure will be entirely system driven.The changes will be applicable in 3 months from the date of issuance of the circular.

Further, the regulator has also announced the introduction of a special call auction mechanism for price discovery of scrips of listed investment companies (ICs) and listed investment holding companies (IHCs).

Sebi said that scrips of a few listed ICs and IHCs are being traded infrequently and at a price which is significantly lower than the book value disclosed by these companies in their latest audited financial statements.

Moreover, these companies generally have no day-to-day operations and hold investments in different asset classes including in scrips of other listed companies.

In order to address these concerns, Sebi has decided to put in place a framework for special call auction with no price bands for effective price discovery of scrips of such investment companies and investment holding companies.