Sebi sets share price framework to tackle market rumours
New Delhi, May 21
Sebi on Tuesday came out with a framework for determining the share price level for transactions in cases where a listed company verifies a market rumour within a stipulated time period.
How it works
- The regulator has proposed considering a scrip’s unaffected price, which refers to the share price of a company, in case there is no market rumour
- In case, there’s a rumour, price variation in the subsequent trading days should be included for adjustment till such day the price does not hit the band limit
Amid instances of market rumours resulting in steep movement of share prices, the watchdog has already come out with detailed norms for verifying the rumours that will be applicable for the top 100 listed companies from June 1.
In this backdrop, Sebi has issued the framework for considering “unaffected price for transactions upon confirmation of market rumour”.
Generally, unaffected price refers to the share price of a company in case there is no market rumour. Since sharp price movements could impact the overall value of a transaction, the regulator has proposed considering a scrip’s unaffected price.
Under the Listing Obligations and Disclosure Requirements (LODR) Regulations, Sebi said that unaffected prices shall be considered for transactions on which pricing norms specified by it or stock exchanges are applicable.
This requirement is also subject to the rumour pertaining to such a transaction being confirmed by the company within 24 hours from the trigger of material price movement, according to a circular.
“It has been specified that the unaffected price shall be considered by excluding the effect on the price of the equity shares of the listed entity due to the material price movement and confirmation of the rumour,” Sebi said.
The requirement to verify market rumours will be applicable to the top 250 listed entities from December 1.
