Sebi to check price-rigging in first-day trade

Concerned over possible price manipulation in stocks on their first day of trade, market watchdog Securities and Exchange Board of India (Sebi) is considering greater surveillance and preventive measures such as a demand-driven price discovery.

An internal consultation process is already underway on this front after several complaints were received by Sebi recently regarding huge price fluctuations on the first-day trading, a senior official said.

The problem is more acute for stocks of the companies that list themselves pursuant to activities like de-mergers, relisting after revocation of earlier listing, suspension or capital restructuring, and not after initial public offers (IPOs), the official added.

The stocks that gets listed on the bourses after an IPO have a reference point for commencement of trading in their public issue price, but there is virtually no such benchmark for pricing of scrips in non-IPO listings, thus leaving room for possible price manipulation.

At the same time, the watchdog is also looking to beef up its own ‘integrated market surveillance system’ as well as the surveillance systems of the stock exchanges for faster identification of any possible price-rigging cases.

Another senior official privy to the matter said, Sebi is currently investigating whether there was any price rigging in the case of Emami Infrastructure last week, as there was wild fluctuation in the share price movement with massive volume on its first-trading day. Adding to the suspicion, there was a massive difference between the prices of the scrip on the BSE and the NSE — in the early morning trade on July 28, when it got relisted pursuant to its demerger from the already-listed FMCG major Emami, the official added.