“`html
- Capital markets regulator Securities and Exchange Board of India (SEBI) has issued new guidelines aimed at reducing the impact of market rumors on stock prices.
- The guidelines introduce the concept of an ‘unaffected price’ to help mitigate artificial fluctuations in stock prices due to rumors.
- “The unaffected price shall be considered for transactions on which pricing norms specified by SEBI or the stock exchanges are applicable,” SEBI stated in its recent circular.
SEBI’s new guidelines are designed to stabilize stock prices by addressing the immediate effects of market rumors, ensuring a more transparent and fair trading environment.
Understanding SEBI’s Unaffected Price Mechanism
The new framework by SEBI defines ‘unaffected price’ as the stock price excluding the impact of material price movements caused by market rumors. This price will be used for various regulatory purposes, including transactions and pricing norms.
Implementation Timeline and Scope
The guidelines will initially apply to the top 100 listed entities from June 1, 2024, and will extend to the top 250 listed entities by December 1, 2024. This phased approach allows for a gradual integration of the new rules across major market players.
Calculation of the Unaffected Price
The unaffected price will be calculated based on the adjusted volume weighted average price (VWAP) from the day of the material price movement until the end of the next trading day after the rumor is confirmed. This method aims to filter out the noise created by speculative trading influenced by rumors.
Impact on Transactions and IPOs
For transactions subject to pricing norms, the unaffected price will be considered for a period of 60 or 180 days, depending on the stage of the transaction. Additionally, for companies planning IPOs, any change in the size of the offer for sale requiring fresh filing will be simplified, enhancing the ease of doing business.
Conclusion
SEBI’s initiative to introduce an unaffected price aims to safeguard investors and maintain market integrity by minimizing the disruptive impact of rumors on stock prices. This move is expected to enhance investor confidence and ensure a more stable market environment.
“`
This HTML structure adheres to the provided guidelines and incorporates the key elements of the new SEBI regulations regarding market rumors and stock price stabilization.
