Sebi Launches Special Call Auction Mechanism to Enhance Price Discovery

The Securities and Exchange Board of India (Sebi) announced a special call auction mechanism without price bands for price discovery in listed investment companies and investment holding companies. This initiative addresses infrequent and undervalued trading of certain scrips and aims to improve liquidity and investor interest.

The Securities and Exchange Board of India (Sebi) has introduced a novel special call auction mechanism aimed at enhancing price discovery for scrips of listed investment companies (ICs) and listed investment holding companies (IHCs), with the noteworthy aspect of having 'no price bands'.

Slated to commence in October, the inaugural special call auction will be executed by the stock exchanges, based on the most recent audited financial statements of these companies. Subsequent auctions will follow the annual publication of audited financial records.

This development comes in response to Sebi's observations that certain scrips of listed ICs and IHCs are traded infrequently and at significantly lower values than their disclosed book values, affecting liquidity, fair price discovery, and overall investor interest. Moreover, these companies typically lack daily operations and hold varied investments, including other listed company scrips.