SEBI Modifies Duration for Call Auction in Pre-open Session for IPOs and Relisted Scrips

Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/85, Dated 20.06.2024

SEBI observed that during the call auction in the pre-open session, orders were placed at higher prices in large volumes and a significant portion of such orders were cancelled just before the closure of the session. This may have created false demand and supply, possibly manipulating the price of scrips to the detriment of common investors.

To prevent misuse of the call auction session, SEBI has decided to modify the current provisions related to call auction sessions for IPOs and relisted scrips and introduced additional surveillance measures at stock exchanges.

As per the modification, the pre-open session for IPOs must be for a duration of 60 minutes, i.e. from 09:00 am to 10:00 am, out of which 45 minutes must be allowed for order entry, order modification, and order cancellation and 10 minutes for order matching and trade confirmation.

Further, the remaining 5 minutes must be the buffer period to facilitate the transition from the pre-open session to the normal trading session. The session must close randomly during the last 10 minutes of order entry, i.e. anytime between the 35th and 45th minute of the order entry window. Such random closure must be system-driven.

Also, in order to enhance transparency in the pre-open call auction session, details of the number and quantity of cancelled orders must be displayed on the website of the stock exchange and terminals of Trading Members on a real-time basis for investors to make informed decisions on the pricing of such stocks. The circular shall be applicable from the 90th day of issuance of the circular.

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