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New IPO Rules Imposed by SEBI to Stop Manipulation & Speculation through Call Auction or Price Discovery Mechanism

SEBI as a watch dog has finally woken and has imposed certain restriction on price of IPO on listing day and this is good as it will keep speculators and promoters at bay with their dubious deals. Price discovery mechanism or call auction is the new mantra on listing day.

IPOs Upto 250 Crores
IPOs upto 250 Crore will have one hour call auction between 9 AM to 10 Am and thereafter a 5% price band from the equilibrium price will be applicable. Additionally stock will remain in Trade for Trade segment for 10 days meaning compulsory delivery.

IPOs Above 250 Crores
All remaining same as above except a price band of 20% will be applied.

Relisted shares will also undergo compulsory 1 hour call auction and price band of 5% will be applicable to them and will remain in Trade to Trade segment for 10 days. Unless price is discovered through call auction, stock will remain in call auction sessions.

Timings for call auction

9 AM- 9:45 AM – Order entry and cancellation process
9:45 AM – 9:55 AM – Order matching
9:55 AM – 10:00 AM – Buffer Period

What happens if No price discovered in call auction for an IPO?

If IPO is not able to establish price through call auction, than issue price will be used to discover the price band.
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