Sebi proposes measures to contain price volatility on shares in derivative

Capital markets regulator Sebi on Sunday came out with a proposal to strengthen the existing price band formulation for scrips in the derivatives segment to deepen volatility management and minimize information asymmetry in the market. 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. In its consultation paper, Sebi has proposed that in case a share in the futures and options segment falls or rises beyond 20 per cent a day, cooling off period should be increased in a phased manner, subject to a maximum cooling-off period of one hour from the current 15 minutes at present. After this, such scrip should be permitted to move only a further up to 2 per cent as against the current limit of 5 per cent. The ...

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