SEBI Proposes New Rules for IPO Opening Prices and Re-Listed Stocks

The Securities and Exchange Board of India (SEBI) has proposed changes to the pre-open call auction mechanism used for IPOs and re-listed stocks, as per news reports.  

This comes after the regulator observed cases where opening prices did not reflect actual market demand, leading to sharp price movements after listing. 

In its consultation paper, SEBI said the existing dummy price band system has resulted in several genuine investor orders being rejected during the pre-open session.  

According to the regulator, this has caused artificially low opening prices in some stocks, followed by persistent buying pressure during regular trading hours. 

Changes Proposed for Re-Listed Stocks 

SEBI has suggested a revised framework for deciding the base price of re-listed shares. If trading resumes within 6 months of suspension, exchanges may use the latest traded closing price on the same exchange. If that price is unavailable, the latest traded price from another exchange can be considered. 

Where no recent traded price is available, the opening price may be determined using valuation reports from two independent valuers or chartered accountants. 

For companies re-listed after more than 6 months of suspension, the base price would be derived entirely through independent valuation certificates. 

The regulator noted that the current mechanism often relies on old book values or face values for long-suspended companies. In several cases, shares reopened near ₹10 despite significantly higher book values. 

Dummy Price Band Mechanism Under Review 

At present, IPOs and re-listed stocks undergo a 1-hour pre-open call auction session between 9 am and 10 am on the first trading day. The session is used to determine the equilibrium price before normal trading begins. 

Mainboard IPOs currently operate within a dummy price band of minus 50% to plus 100% from the base price. SME IPOs follow a fixed plus or minus 90% range. 

SEBI has proposed automatic expansion of these price bands by 10% whenever the indicative equilibrium price nears the upper or lower threshold. The regulator said one IPO witnessed nearly 90% of buy orders getting rejected because they were outside the permitted range. 

Participation Requirement 

SEBI has also proposed that price discovery should be treated as valid only if at least 5 unique PAN-based buyers and 5 unique PAN-based sellers participate in the auction session. 

The regulator has invited public comments on the proposals until June 11, 2026. 

Read More: Gold Loans Surge 50% to ₹19 Lakh Crore in FY26 Amid Rise in Secured Borrowing! 

Conclusion  

SEBI’s proposed changes focus on revising the way opening prices are discovered for IPOs and re-listed stocks. The consultation paper remains open for public comments until June 11, 2026. 

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