Market regulator Securities and Exchange Board of India (SEBI) has proposed a harmonised framework for determining the base price for pre-open call auctions and the price band mechanism for securities listed on multiple stock exchanges, seeking to address price disparities in illiquid stocks and improve market efficiency.

In a consultation paper issued on Thursday, SEBI said the proposal aims to bring consistency in the treatment of securities traded across exchanges, particularly in situations where trading activity is absent on one or more exchanges. Stock exchanges currently apply scrip-wise price bands independently, using their respective previous-day closing prices.

While the price bands are coordinated across exchanges, SEBI noted that "currently there is no mechanism to adjust the price bands on the stock exchange(s) where there is no trading on the previous day," which "may lead to progressive divergence" in prices of the same security across exchanges.

Highlighting the need for regulatory intervention, SEBI observed that in certain illiquid securities, prolonged non-trading on one exchange, combined with persistent buying interest on another, can result in substantial differences in market prices. The consultation paper stated that "non-trading of scrip on one of the exchanges and persistent buy side pressure along with the practice of application of price band on the previous day closing price, has been causing significant price divergence in the closing prices of scrips across the exchanges."

It further noted that "such divergence also holds the potential of non-trading of the scrip on one of the exchanges."

To illustrate the issue, SEBI presented an example of a stock initially trading at ₹100 on two exchanges. While the stock price gradually rose to ₹160 on one exchange due to continued trading activity, the absence of trades on the other exchange kept its permissible trading range tied to an outdated closing price. As a result, the stock remained effectively capped at ₹120 on the non-trading exchange, creating a significant pricing mismatch.

The matter was deliberated by SEBI's Secondary Market Advisory Committee (SMAC) during its meeting held on April 16-17, 2026. Based on the committee's recommendations and subsequent discussions with stock exchanges, SEBI has proposed a common methodology for determining price bands and base prices.

Under the proposed framework, if a security trades on all exchanges, or does not trade on any exchange, each exchange may continue to use its own latest closing price for determining the next day's price band.

However, where a security trades only on one exchange, all other exchanges would be required to use the closing price of the exchange where trading occurred for fixing both the price band and the base price for the next day's pre-open call auction session.

Further, in cases where a security trades on two or more exchanges, but remains inactive on one or more others, the non-trading exchanges would adopt the closing price from the exchange recording the highest trading volume in that scrip, for determining the subsequent day's price band and pre-open session base price.

To ensure seamless implementation, SEBI has also proposed that stock exchanges "execute necessary agreements/ MoUs or make necessary arrangements for sharing the closing prices with each other."

SEBI has invited public comments on the proposals until July 2, 2026.

Published on June 12, 2026