On Jun. 20, IND SEBI introduced a special call auction mechanism.
IND SEBI introduced a special call auction mechanism for price discovery of scrips re listed investment companies (ICs) and listed investment holding companies (IHCs).
Follows IND SEBI Oct. 2023 issued master circular for stock exchanges, see #188261.
Background
The master circular (#188261) prescribed the framework for call auction is applicable for pre-open sessions; pre-open sessions for IPO & relisted scrips; and illiquid scrips.
However, the scrips of a few listed ICs/IHCs are traded infrequently and at a price which is significantly lower than the book value; the price difference affects liquidity.
IND SEBI decided to put in place a framework for special call auction with no price bands for effective price discovery of scrips associated with such ICs and IHCs.
Special Call-Auction Eligibility
The ICs or IHCs shall be identified based on the uniform industry classifications.
The scrip of ICs or IHCs should have been listed and available for trading for a period of at least one year and the said scrips are not suspended for trading.
The company's total assets in relation to investments in scrips of other listed companies, must represent at least 50% of the book value per share of such company.
Plus other criteria on the 6-month volume weighted average price (VWAP) of the scrip.
Special Call-Auction Procedures
Stock exchanges that initiate the process for special call-auction with no price bands for ICs or IHCs shall provide a 14 days’ notice to market; notice content specified.
The special call auction mechanism shall be provided only once in a year.
Stock exchanges shall have adequate risk management and surveillance mechanism.
Applicability
The first special call auction shall be conducted in the month of Oct. 2024.
Subsequent auctions can be done when annual audited financial statements are ready.
