The Securities and Exchange Board of India (SEBI) on May 20, 2023, issued Consultation Paper on Price Band formulation for scrips in the Equity Derivatives segment to strengthen volatility management and minimise information asymmetry.
Price bands for scrip or a derivative contract represent the boundaries within which the competing orders of buyers and sellers are accepted for the day by the trading system of the stock exchange. For scrips having derivative contracts on them, these price bands are dynamic and can be flexed depending on trading during the day. The objective of this paper is to seek public comments on strengthening the existing price band formulation for scrips in the derivative segment to improve volatility management and consequently risk management in the market and minimize information asymmetry in the market.
In general, dynamic price bands for scrips are put in place with the following illustrative guiding principles such as Volatility Control Measure (VCM)and continuity of Trading and Price Discovery Process.
Comments as per the format mentioned may be sent latest by June 05, 2023.
