One proposal under consideration is that the mechanism for bending dummy price bands during SPOS should be uniform across exchanges and applied immediately when necessary.
Current regulations do not allow price bands for re-listed scrips during the pre-open session to enable fair price discovery. However, stock exchanges set dummy price bands in the range of -85 percent to 50 percent of the base price to prevent members from entering the wrong number during the session or orders, known as fat-finger errors.
This came under scrutiny a year ago after Swan Defense stated to SEBI that its shares were discovered during SPOS at a price of around ₹36, despite a book value of over ₹1,500 per share. The company argued that using par value as a base price, combined with dummy price ranges, led to artificially suppressed price discovery and harmed shareholders.
Further, the base price is taken as the lower of the par value or the book value, especially when a stock has been suspended for more than a year.
Uniform bend
Sources said the regulator plans to continue with dummy price bands as a risk management measure during SPOS, but wants the framework to be more consistent and less restrictive to enable better participation. “The view is that dummy price ranges serve a purpose, but they should not hinder the discovery of fair prices,” said a person familiar with the matter.
One proposal under consideration is that the mechanism for bending dummy price bands during SPOS should be uniform across exchanges and applied immediately when necessary.
Currently, the dynamic price bands posted by exchanges are manually adjusted in multiples of 10 percent in coordination with other exchanges, and this is only allowed up to 1 minute before the arbitrary closing period, i.e. from 9:35 AM to 9:45 AM. So even if the SPOS is in operation after 9:35 AM, there can be no relaxation of the dummy price bands.
Equilibrium price
To further strengthen price discovery, SEBI also plans to adopt elements of the special call auction framework used for listed investment companies and investment holding companies, another source said.
SPOS would only be considered successful if the discovered price is based on orders from at least five PAN-based unique buyers and sellers. “If the call auction is not successful on the first day, the proposal is that it should continue on the next trading day and so on until a price is discovered,” the source said, adding that this could prevent prices from being set based on a handful of trades.
The base price methodology used by the exchanges will also be adjusted for a more “appropriate and realistic” approach that reflects the present value of the scrip, with potentially more meaningful reliance on book value. “The idea is that the base price for relisted shares should not be mechanical, but should reflect economic reality,” one said.
Currently, exchanges use the lower of book value received from the company’s statutory auditor, which is not older than six months, or the face value, subject to a minimum of ₹1 per share, if the company was suspended more than a year before the said session.
The proposals have been approved by industry participants and will be considered internally before public consultation. An email sent to SEBI for comment did not elicit a response.
Published on January 13, 2026
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