Clarification on Introduction of Call Auction in pre-open session
Summary
This SEBI circular clarifies the procedure for handling unmatched orders in the pre-open session when an equilibrium price is not discovered. It mandates that stock exchanges communicate these rules to brokers, who must then inform their clients regarding call auction orders. The circular explicitly supersedes a previous clarification issued on August 27, 2010.
Text
In case the equilibrium price is not discovered in the pre-open session, wherein, there are only market orders, the market orders shall be matched at previous day’s close price and all unmatched market orders shall be shifted to the order book of the normal market at previous day’s close price following time priority. Previous day’s close price shall be the opening price.
In case the equilibrium price is not discovered in the pre-open session and there are no market orders to be matched, all unmatched market orders (at previous day’s close price) and limit orders shall be shifted to the order book of the normal market following price time priority.
The stock exchanges should bring out this clearly in their communication to brokers, who in turn shall disseminate the information to their clients desirous of placing call auction orders in pre-open session.
In light of the above, SEBI Circular No. CIR/MRD/DP/27/2010 dated August 27, 2010 on “Clarification on Introduction of call auction in pre-open session” shall stand superseded.
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Clarification on Introduction of Call Auction in pre-open session. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.