The Bombay Stock Exchange (BSE) has implemented revised circuit filter norms for stocks listed on its SME platform, effective from Monday, aimed at curbing excessive volatility and protecting retail investors.
New Circuit Filter Framework
Key changes in the revised framework:
- Initial circuit limit: 20% (reduced from 25%)
- Subsequent trading sessions: Dynamic circuit limits
- Price band for new listings: 5% for first 10 days
- Cool-off period: 15 minutes after hitting circuit
Rationale for Change
The new norms come after SEBI’s directive to address concerns over excessive volatility in SME stocks. Several stocks had witnessed multi-fold gains, raising concerns about market integrity.
Impact on Trading
The revised circuit filters are expected to moderate price movements and reduce speculative trading. Market participants anticipate more orderly price discovery.
Industry Response
Merchant bankers and market participants have welcomed the balanced approach, noting that the changes protect investors while not stifling genuine price discovery.
Compliance Requirements
Listed companies are required to comply with enhanced disclosure norms, including quarterly updates on material developments and investor grievance resolution.
Surveillance Measures
BSE has also enhanced its surveillance mechanisms, with dedicated monitoring of unusual trading patterns in SME stocks.
SME Platform Statistics
The BSE SME platform currently has 580 listed companies with a combined market capitalization of Rs. 1.2 lakh crore.
