It’s a way of dealing with an old problem: why does the same stock have a different quote depending on where you look? By harmonising the base for pre-open and price bands, the regulator wants to put a lid on that kind of risk and close up any artificial gaps, especially in the thin end of the market. Public comments are open until July 2, 2026.
Why this matters for investors
When prices don’t line up, it can mean trapped orders, more slippage and a loss of faith in the system. Take an illiquid name: if the circuit limit is stale on one side, it can put a halt on things while the stock is moving on another. A common method for the base price should give you a cleaner read on value and an easier way out, which is good for small players and funds in lower-liquidity pockets.
As it stands, exchanges put their own spin on the daily bands for a given scrip – usually 20 per cent either way for non-derivatives. They use the prior day’s close as their point of reference. But when those numbers don’t match up, you’re left with two versions of the truth for the same security.
What is changing in SEBI’s plan
SEBI has put forward a way to get the reference price in sync when trading is lopsided. It’s about having no-nonsense clarity in the pre-open and the circuit limits, so you don’t have to deal with the oddities that can get in the way of doing business.
Here is the way they would pick a reference price, scenario by scenario:
– Stock only on one exchange? The rest will take that closing price
– Not moving on one but there on several? Go with the one with the most volume
– Trading on all or none? Each to their own latest close
Illiquid scrips are the pressure point
The consultation paper zeroes in on the trouble with thinly traded shares. The regulator has seen it happen: a lot of buying on one side of town and nothing on the other can create a chasm in the closing prices. That in itself can be enough to keep people off the lagging exchange in a self-perpetuating loop.
The paper puts it like this: ‘In respect of a few illiquid scrips, it has been observed that non-trading of scrip on one of the exchanges and a persistent buy side pressure along with the practice of application of price band on the previous day closing price has been causing significant price divergence in the closing prices of the scrips across the exchanges.’
And then: ‘Such divergence also holds the potential of non-trading of the scrip on one of the exchanges’.
Impact on liquidity, discovery, and risk
Get the base price in harmony and you remove a good bit of the friction that scatters liquidity. With tighter dispersion in the circuit limits, you won’t be as likely to have an order held up by a band that’s long past its prime.
If you are in the large-caps, you may not notice much of a difference. But for the small and illiquid, this kind of alignment can do away with some of the spread, make for better matching and, down the line, a fairer valuation. It means a more predictable way to start the day with less room for distortion.
Operational steps for exchanges
For any of this to work, SEBI has told the exchanges to put in place proper data-sharing for their closes. It’s the only way to have a single point of reference when things diverge. The message is plain: we want consistent bands and pre-open pricing without the inactivity-driven hiccups.
Right now, every exchange runs its own numbers based on its own close. The new framework is meant to put an end to that siloed approach in certain cases, so the signal doesn’t get lost in translation between platforms.
Timeline and what comes next
You have until July 2, 2026 to let SEBI have your say. After they’ve had a look at the feedback, they will put the finishing touches on how this is to be done. For the investor, it’s a step in the right direction toward a neater opening and fewer cross-exchange discrepancies.
Those who need to execute in illiquid names will be the ones to watch. If you have something to add on the practical side – be it on outages, volumes or how timely the data is – your input could well influence the final product.
