Exchanges to hold special trading session for holdcos on October 28

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Stock exchanges will conduct a special call auction for select investment holding companies (holdcos) on October 28 following the new framework introduced by the Securities and Exchange Board of India (Sebi) for price discovery.
 

Sebi had in June issued the new framework along with specified conditions for holdcos to be eligible for the special window.

The special pre-open session will be held for nine holdcos including Pilani Investments, Kalyani Investments, TVS Holdings, and Maharashtra Scooters.
 

The subsequent list for the special window will be updated later, the exchanges said.
 

Holdcos do not have operations of their own but hold stakes in other assets including shares of other listed companies. These firms mostly hold investments in their own group companies.
 

Sebi had issued the framework to address the gap at which these holdocs are traded and the intrinsic value of their holdings.

Typically these companies trade at a high discount.
 

The special call auction will have no price bands, according to the directive from Sebi, to enable price discovery.
 

“Trading members are requested to note that if the call auction for a security is not a success on Day 1, it shall continue on the next day and till such time the price is discovered,” said the exchanges.
 

The exchanges in a circular on Wednesday added that the special session will be treated as successful if the price discovery is based on orders received from at least five permanent account numbers (PAN) on each side—buyers and sellers.
 

“In case the minimum criteria for 5 PAN-based unique buyers and sellers is not met i.e. unsuccessful price discovery, all the outstanding orders shall be cancelled by the Exchange at the end of session (including matchable orders, if available),” said NSE in the circular dated October 16.