The Securities and Exchange Board of India (SEBI) on May 21, 2026, issued a Consultation paper on “Review of price discovery mechanism through Pre-open Call Auction Session for IPO and Re-listed scrips.”
The following has been stated:-
•SEBI has proposed major reforms to the pre-open Call Auction Session for IPOs and re-listed shares to improve fair price discovery and reduce artificial price suppression.
•The consultation paper explains that currently there is no price band in the call auction, market orders are not allowed, and only limit orders are matched to determine an equilibrium price.
•SEBI observed that rigid dummy price bands and outdated base price methods, especially for re-listed shares, often led to rejection of genuine buy orders and continuous upper circuits after listing.
•To address this, SEBI has proposed a revised methodology for determining base prices using recent market prices or valuation reports from independent chartered accountants, depending on the suspension period.
•The regulator also proposed automatic and uniform flexing of dummy price bands across exchanges in multiples of 10%, including for SME IPOs and during the random closure period, to ensure smoother and more efficient price discovery.
•Additionally, SEBI suggested that successful price discovery should require participation from at least five unique PAN-based buyers and sellers, while unsuccessful call auctions for re-listed shares would continue on subsequent trading days until a valid equilibrium price is discovered.
•Public comments and objections on the consultation paper can be submitted to SEBI till June 11, 2026.
