Nse Alters Price Bands, Tightens Entry

The National Stock Exchange (NSE), in an effort to curb price manipulation further, has decided to alter the existing price bands of 1,394 securities.

The bands have been modified so that they are based on liquidity rather than only volatility of scrips. Earlier the price band structure was fixed only on the volatility factor.

The executive committee of the NSE decided on Tuesday to alter the base for the price bands as over the years the potential for price manipulation became more in the case of illiquid securities.

The new price bands will be effective from Sept-ember 10.

Under the revamped set-up, 100 companies comprising Nifty and midcap securities will have a daily price band of 10 per cent and a weekly band of 25 per cent.

 

Another 491 securities with reasonable liquidity have been put under a daily price band of 7 per cent and a weekly price band of 20 per cent.

The remaining 903 securities have been put in the daily price band of 5 per cent and a weekly price band of 15 per cent. The securities with price of less than Rs 10 will remain in the price band in a daily price band of 15 per cent and a weekly price band of 30 per cent.

"This move will curb trading malpractices which are normally witnessed in junk stocks. Operators were involved in pushing up trading volumes to entice investors into the market,'' Indra Kumar Bagri, chairman, Oasis Securities, a leading NSE member said.

The exchange has also decided to enforce a stringent entry norms for fresh listing.

The minimum paid up equity capital of the companies have been fixed at Rs 20 crore.

Business Standard had yesterday reported that this was on the anvil. In respect of the initial public offerings (IPOs), the company seeking listing at the exchange will have to have a paid up capital of Rs 20 crore against the earlier Rs 10-crore limit.

In the case of existing companies, (which are listed at other exchanges), the exchanges has stipulated that for companies having a minimum paid up capital of Rs 20 crore, the minimum market capitalisation capitalisation sho-uld be Rs 20 crore.

Companies with a paid up capital of Rs 100 crore, the market capitalisation should be a minimum of Rs 40 crore.

It has also notified that the companies which have failed to pay a dividend in at least two out of three years, then such companies will have to a minimum net worth of Rs 50 crore.

NSEs move will curb trading malpractices which are normally witnessed in junk stocks. Operators were involved in pushing up trading volumes to entice investors into the market...