SEBI's Framework to Shield Stock Prices Against Market Rumours

The Securities and Exchange Board of India (SEBI) has introduced a framework centred on the concept of "unaffected price" to counter the impact of market rumours on stock prices.

Objective:

1. Maintaining a fair price for the stock by eliminating undue influences before a rumour is confirmed or denied.
2. To protect the interests of both companies and investors.

Implementation:

• The framework will be rolled out in phases:
  1. Phase 1 (June 1st): Applicable to the top 100 listed entities.
  2. Phase 2 (December 1st): Applicable to the top 250 listed entities.

Mechanism of Unaffected Price:

1. The "unaffected price" is the stock's price prior to the emergence of a market rumor.
2. This mechanism promotes fair price discovery and safeguards the interests of market participants.

Benefits:

1. Improved market integrity through enhanced transparency and prompt responses from listed companies.
2. Increased investor confidence.
3. Reduced speculative trading activity.
4. Level playing field for buybacks, mergers and acquisitions, and other transactions.

Timeframe:

• The "unaffected price" must be determined within 24 hours of any significant price movement unrelated to the rumour.

About SEBI:

1. The Securities and Exchange Board of India (SEBI) is a statutory regulatory body tasked with protecting investor interests and overseeing the securities market.
2. SEBI's functions includes:
   1. Preventing insider trading, price manipulation, and fraudulent practices.
   2. Regulating intermediaries, stock exchanges, and corporate activities.
   3. Educating investors, promoting fair practices, and facilitating the development of the securities market.

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