No bands for Day 1of non-IPO listings: Sebi

Taking note of concerns that a circuit limit on the first day of trading could hamper price discovery, Securities and Exchange Board of India (Sebi) has asked the bourses to do away with imposition of price bands in the case of non-IPO listings.

In a circular sent to all the stock exchanges, Sebi said "it has received representations expressing concerns of effect of price band on price discovery in cases of merger, de-merger, amalgamation, capital reduction and scheme of arrangement."

Currently, the stock exchanges have a policy for imposition of price band on first day of commencement or recommencement of trading in respect of cases of merger, de-merger, amalgamation, capital reduction, scheme of arrangement, revocation of suspension, direct listing on another stock exchange while being listed on one exchange.

Following consultation with the bourses, Sebi said it has been decided that in cases of merger, demerger, amalgamation, capital reduction, scheme of arrangement and in cases of rehabilitation packages approved by the Board of Industrial and Financial Reconstruction and in cases of corporate debt restructuring (CDR) packages, "there is no need to have a price band on the first day of commencement or recommencement of trading."

"The price band may be retained in all other cases on the first day," the regulator said. The new policy for commencement and recommencement of trading of securities would come into force with immediate effect, it added.

Sebi has also asked stock exchanges to provide it with the implementation status in the next monthly development report.

The move is aimed at protecting the interests of investors in securities and promote the development of and regulate the securities market, the circular said.