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India Eyes Unified Stock Prices Across Exchanges
11 Jun
Summary
- SEBI proposes mechanism for uniform stock prices across exchanges.
- Inactive exchanges to adopt active exchange closing prices.
- Goal is to improve price discovery and liquidity in illiquid stocks.
The Securities and Exchange Board of India (SEBI) is seeking to harmonize stock prices across various exchanges with a new proposal. This initiative targets instances where a stock exhibits significant price divergence due to its non-trading status on certain platforms.
SEBI's consultation paper, released on Thursday, outlines a mechanism where an exchange with no trading activity for a stock will adopt the closing price from the exchange where the stock is actively traded. This is intended to establish a common pre-open base price and price band for the subsequent trading day.
Currently, exchanges independently calculate circuit limits, which can lead to frozen prices and bands for illiquid stocks if they cease trading on one exchange. The proposed changes aim to prevent these divergences, ensuring uniform price bands and improving market efficiency.
This new framework is expected to primarily impact illiquid and small-cap stocks that do not consistently trade across all exchanges. SEBI has invited public comments on the proposal until July 2, with the changes anticipated to foster more seamless trading and reduce execution hurdles for investors.
