BSE Phase out Weekly and Monthly Price Bands for Stocks

INDORE, India - March 14, 2017 - PRLog -- The Bombay Stock Exchange (BSE) has decided to do away with weekly and monthly price limits for securities listed on its platform to align periodic price band mechanism with new GSM – New graded Surveillance measure – frame work. The BSE will phase out the weekly price bands from March 20 and the monthly price bands from April 3 for companies that attract such periodic price limits. The price bands were devised to contain price volatility of stocks across long period to make sure improved price formation and better regulatory oversight.

The Exchange said, with the recent introduction of the GSM framework on Feb 23, 2017, a need has been felt to rationalize periodic price band framework implemented by the exchange to compliment GSM framework and to align the proactive steps taken by exchange, in an orderly and phased manner.

Accordingly, the BSE will phase out weekly and monthly price bands for companies, but will keep the quarterly yearly periodic price limits. Also, all other provisions of periodic price band framework shall remain unchanged.

Nation's stock exchanges have put in place the new graded Surveillance measure to check any abnormal rise in share price not commensurate with the company's financial health and fundamentals such as earnings, book value, fixed assets, net worth, P/E multiple.

The new mechanism has been implemented on back of recent cases where shares of certain companies have seen a vertical surge in prices despite no major trigger.

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