BSE introduces addl periodic price bands for securities

To prevent excessive volatility in shares, leading stock exchange BSE has introduced weekly, monthly, quarterly and yearly based price band framework for the securities exclusively listed on its platform.
So far, BSE had a daily price band mechanism -- maximum permissible limit, within which the share price can move in a day. The listed-securities are assigned a daily price band of either 20 per cent, 10 per cent, 5 per cent or 2 per cent based on the pre-decided joint criteria.
The new long duration price band framework, which is in addition to the daily price band mechanism, will apply to stocks "exclusively" listed and traded on BSE equity trading platform including SME and SME ITP platform.

"The new weekly, monthly, quarterly and annual price bands have been devised to contain volatility in the prices of stocks across long period which is expected to ensure improved price formation and better regulatory oversight," a BSE spokesperson told PTI.
"The improved long duration price band framework is also expected to help eliminate tax avoidance schemes that have come to light recently and also help eliminate price manipulation in Indian markets making them more robust over a longer period," he added.
Under the new framework, a security having daily price band of 20 per cent can move upward or downward up to 60 per in a week. Whereas in a month it can move upward or downward up to 100 per cent. It can move 200 per cent or 400 per cent on a quarterly and yearly-basis respectively.

Similarly, security with a daily price band of 10 per cent can move 30 per cent on weekly-basis, 60 per cent on monthly-basis, 100 per cent on quarterly-basis and 200 per cent in a year.

A stock assigned a daily price band of 5 per cent would be allowed a 20 per cent (weekly), 30 per cent (monthly), 60 per cent (quarterly) and 100 per cent (annually) movement.
Those with 2 per cent band will have 10 per cent band for the week, 20 per cent for the month, 30 per cent on quarterly basis and 50 per cent movement annually.

Further, the exchange said a factor of 200 per cent of BSE mid-cap index movement would be applied for taking into account the overall movement in the market to the monthly, quarterly and yearly price band limits.
This factor shall be added in the direction of the movement of the index (rounded off to the nearest number) and the threshold of the opposite direction will remain unchanged.
For example if the BSE mid-cap has moved up by 5 per cent in the month, then the upper limit of monthly price band shall be adjusted by 10 per cent that is the upper monthly price band shall be 110 per cent whereas the lower price band would remain as 100 per cent, BSE said.

"In the event of any corporate action, the respective price of the security shall be adjusted as per the prescribed process," the stock exchange said.