Top News

SEBI mulls changes for re-listed shares: How it affects companies?
20 Aug 2025

The Securities and Exchange Board of India (SEBI) is considering a revamp of the price discovery process for initial public offerings (IPOs) and re-listed shares.

The move comes after concerns were raised over the fairness of Swan Defense's re-listing earlier this year.

The regulator has sought feedback from stock exchanges and other market participants on the matter.

Dummy price bands under scrutiny
Controversy

The use of dummy price bands during special pre-open sessions has come under fire from some investors. They argue that it compromises the fairness of the process.

SEBI is now looking into whether structural changes are needed to make this process more transparent and efficient, especially for re-listed securities emerging from insolvency.

Discussions with market participants underway
Discussions

SEBI has started discussions with stock exchanges, brokers, and other market participants.

The goal is to determine if the current mechanism needs a structural change.

The regulator wants to make sure that price discovery in re-listed securities, including those emerging from insolvency resolution, is transparent and efficient enough to restore investor confidence.

Key issues being debated
Debate

Key issues under consideration include whether the dummy price band system should be redesigned to permit greater participation in special pre-open sessions.

Other points of debate are if the manual coordination between exchanges for flexing price bands should be replaced with an automated mechanism, and if the rule preventing any relaxation after 9:35am should be reconsidered.

Controversy surrounding Swan Defense's re-listing
Case study

The debate was sparked by Swan Defense's shares being re-listed on the BSE and NSE after its resolution plan was approved.

During this process, a dynamic or dummy price band of -85% to +50% was imposed on the stock.

The discovered price of ₹35.99 on BSE was automatically carried forward as the opening price on NSE, much to the company's dismay as it fell far below its book value.

Response from exchanges
Dispute

Swan Defense strongly opposed the discovered price, arguing that it was well below its book value. The company claimed this eroded shareholder wealth and also damaged investor confidence.

In response, exchanges defended their approach by saying dummy price bands are part of the framework since 2012 to prevent fat-finger errors.

They also clarified that base price was correctly taken as ₹10, face value of share, as per existing rules requiring adoption of the lower between face value and book value.