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The BSE plans to introduce pre-opening trade in IPO stocks on the day of listing, a practice that is now permitted for Sensex stocks and 20 large-cap counters.
“We are keen on allowing the IPO stocks to have a pre-open session on their debut day. We are talking to the market watchdog SEBI on this,” the BSE Deputy Chief Executive, Mr Ashishkumar Chauhan.
As to how this would assist the debutante company, Mr Chauhan said it will help avoid wild price fluctuations on the listing day, as it does with other stocks. “Instead of the 50 stocks that are allowed to have pre-open now, when there is a listing, the debutante scrip will also be part of the pre-open trade on that day.”
On October 18 last year, the BSE and the NSE had started a 15-minute special pre-opening session to help reduce the extreme price volatility typically visible in the first few minutes of trade, and to ensure better integration of domestic markets with international markets.
The SEBI had allowed the introduction of a pre-open session call auction on the bourses between 9 and 9.15 AM last July.
Market experts said pre-opening trade will reduce price volatility due to multiple matching of orders at a single price, ensure better price discovery and dilute the impact of any major swings. Another advantage is a fairer market because all trades get executed at the same price.
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