Modification in duration for Call auction in pre-open session for Initial Public Offer (IPO) and Relisted scrips
Summary
This circular modifies the duration and surveillance mechanisms for call auctions in the pre-open session for IPOs and relisted scrips. It introduces a 60-minute session with random closure during the order entry window to prevent market manipulation. Stock exchanges are mandated to implement specific alert parameters and report suspicious activities to SEBI.
Text
Paragraph 17.2.1 of the Master Circular has been modified as under: Duration of Session...
The session shall be for a duration of 60 minutes i.e. from 9:00 a.m. to 10:00 a.m., out of which 45 minutes shall be allowed for order entry, order modification and order cancellation, 10 minutes for order matching and trade confirmation and the remaining 5 minutes shall be the buffer period to facilitate the transition from pre-open session to the normal trading session.
The session shall close randomly during last ten minutes of order entry i.e. anytime between 35th and 45th minute of the order entry window. Such random closure shall be system driven.
Stock exchanges shall have adequate surveillance mechanisms for pre-open call auction session for IPO or relisted scrips to avoid any kind of manipulation.
In addition to the surveillance mechanisms, the stock exchanges shall generate alerts based on the following indicative parameters: i. cancelled quantity for a particular client exceeds 5% of total cancelled quantity across the market... ii. value of cancelled quantity for a particular client exceeds 5% of total value... iii. cancelled quantity for a particular client exceeds 50% of total quantity placed by that client... iv. value of cancelled quantity for a particular client exceeds 50% of total value... v. Modification of prices significantly away from previously placed order(s). vi. Stock exchanges can have additional parameters for generating alerts.
For the alerts generated based on the above parameters, stock exchanges shall provide a report to SEBI by End of Day (EOD). Further, based on analysis, stock exchanges shall seek explanation from the clients for the cancellations or modifications done by them during the pre-open session.
To enhance transparency in pre-open call auction session, details of number and quantity of cancelled orders shall also be displayed on the website of stock exchange and terminals of Trading Members on a real time basis for investors to take informed decision on the pricing of such stocks.
The provisions of this circular shall be applicable from 90th day of issuance of the circular.
take necessary steps and put in place necessary systems for implementation of the above.
make necessary amendments to the relevant bye-laws, rules and regulations, wherever required, for implementation of the above;
bring the provisions of this circular to the notice of the market participants (including investors) and disseminate the same on their website.
This circular is issued in exercise of the powers conferred under section 11(1) of the Securities and Exchange Board of India Act 1992 read with regulation 51 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Modification in duration for Call auction in pre-open session for Initial Public Offer (IPO) and Relisted scrips. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.