Securities and Exchange Board of India (SEBI) has modified norms related to call auction session for IPO and relisted scrips.
During the call auction in pre-open session for certain IPO and relisted scrips, the regulator found that orders were placed at higher price in large volumes and 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 manipulating the price of the scrips to the detriment of common investors, SEBI said in a circular.
As per new norms, the session will be for 60 minutes, from 9:00 am to 10:00 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 session will close randomly during last 10 minutes of order entry.
The stock exchanges will generate alerts based on various parameters — for instance, if the cancelled quantity for a particular client exceeds 5 per cent of total cancelled quantity across the market during the pre-open session. Stock exchanges will seek explanation from clients for cancellations or modifications during the pre-open session. The number and quantity of cancelled orders will be displayed on exchange and member websites on a real time basis.