In a circular sent to all the stock exchanges of the country, Market regulator SEBI (Securities and Exchange Board of India ) has asked the bourses to do away with imposition of price bands ( circuit limit on first day of trading) in the case of non-IPO share listings in order to facilitate accurate price discovery.

Currently, price band policy on first day of commencement or recommencement of trading involves cases of merger, de-merger, amalgamation, capital reduction, scheme of arrangement, revocation of suspension, direct listing on another stock exchange while being listed on one exchange.

Following consultation with the bourses, SEBI said it has been decided that in cases of merger, demerger, amalgamation, capital reduction, scheme of arrangement, and in cases of rehabilitation packages approved by the Board of Industrial and Financial Reconstruction and in cases of Corporate Debt Restructuring (CDR) packages, “there is no need to have a price band on the first day of commencement or recommencement of trading.”

“The price band may be retained in all other cases on the first day,” SEBI said. The new policy for commencement and recommencement of trading of securities would be implemented with immediate effect, it noted.

The new policy is aimed at protecting the interests of investors in securities and promote the development of and regulate the securities market.