Market regulator Securities and Exchange Board of India
(SEBI), which recently banned several brokers from trading
in shares on their debut on the bourses, plans to prescribe
a first-day price band for initial public offers (IPOs)
to check any irregular movements in the scrips.
"Until now there has not been artificial barriers,
no filters, no circuit breakers at this level because
we said let market discover the price," SEBI chairman
M Damodaran as said, adding tjis may have to change.
"It would be a higher filter, not a normal filter,
to enable price discovery. We believe on day one, we need
a price filter." The prce band, however, would not
affect the effective price discovery mechanism, he added.
SEBI is currently analysing available evidence of excessive
price variation on the first day of trading to assess
impacts and decide on imposing price filters on new listings.
SEBI had recently issued draft guidelines on the first
day of re-listing of shares and had invited public comments
on imposition of circuit filters.
The regulator also last week banned seven brokerages from
post-IPO trading in shares for their alleged role in huge
price movements recorded in stocks like Cambridge Technology,
Mindtree and Pyramid Saimira Theatre on their first-day
Some of these stocks witnessed unprecedented jump in their
prices immediately after the listing.
Damodaran said about the price movements in newly-listed