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The market regulator, Securities and Exchange Board of India (Sebi), on Thursday imposed a 20 per cent price band on stocks that are components of an index derivative but not in the derivatives segment themselves.
Currently, there was no circuit filter on stocks, which are components of an index, traded in the futures and options (F&O) segment.
For instance, Jain Irrigation had no circuit filter even though it is not a part of the F&O segment, as it is a part of the NSE Midcap 50 Index, which has derivatives products based on it. Starting Febuary 17, such stocks will have circuit filters.
Stocks that are a part of the F&O segment will continue to have no circuit filters.
A circuit filter is the maximum fluctuation in price allowed during trading. Trading is suspended in a stock if it hits the maximum permissible limit in either direction.
The latest move follows a recommendation made by the Secondary Market Advisory Committee of Sebi to protect against excessive price movements, said the regulator, in a circular.
