At present, stock exchanges impose scrip-wise price bands of up to 20% on stocks that are not part of the derivatives segment. The previous day's closing price serves as the reference point for both the pre-open call auction session and the day's price band calculations. Although exchanges coordinate to maintain uniform price-band percentages, the actual limits are set by each exchange's closing price.
SEBI has observed that this system can create anomalies in the case of illiquid stocks. When a stock remains inactive on one exchange but continues to trade actively on another, the closing prices on the two exchanges can diverge significantly over time. The inactive exchange continues to rely on an outdated closing price, while the active exchange updates its reference price daily based on market activity.
According to SEBI, such situations may eventually render the stock virtually non-tradable on the inactive exchange, as its price band remains disconnected from the prevailing market price.
The regulator illustrated the issue with an example. If a stock closes at ₹100 on two exchanges and subsequently trades actively only on one, its price may gradually rise to ₹160 on that exchange. However, the inactive exchange would continue to calculate its price band using the original ₹100 reference price, creating a substantial mismatch between the two markets.
The issue was examined by SEBI’s secondary market advisory committee (SMAC) in April 2026. The Committee recommended a common framework to ensure that exchanges use a consistent reference price when trading activity is uneven across platforms.
Based on these recommendations, SEBI has proposed that if a stock either trades on all exchanges or does not trade on any exchange, each exchange may continue to use its own latest closing price to determine the next day's base price and price band.
However, if a stock trades on only one exchange, all other exchanges would be required to adopt the closing price of the exchange where trading took place. This price would then be used for determining both the next day's price band and the base price for the pre-open session.
In situations where a stock trades on more than one exchange but remains inactive on certain exchanges, SEBI has proposed that the inactive exchanges should use the closing price from the exchange that recorded the highest trading volume in that stock. The regulator believes this approach will minimise pricing discrepancies and improve consistency across trading platforms.
To implement the framework, SEBI has also suggested that stock exchanges enter into formal arrangements to share closing price data. This would enable exchanges to promptly adopt the appropriate reference price and maintain uniformity in price-band calculations.
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