BSE launches Add-on Price Band Framework to curb volatility in some mid and small-cap stocks

To counter price volatility in mid and small-cap stocks, BSE has introduced a new surveillance framework - Add-on
Price Band Framework for certain stocks.

BSE had released the circular on Monday. According to sources, the exchange may modify the details and may also release a list of stocks that fall under this new circular category.

According to a press release, the stocks shortlisted will be subjected to additional periodic price limits viz. Weekly, Monthly and Quarterly price limits. These add-on price bands shall be in addition to the applicable daily price bands of such securities.

Further, the Add-on price band shall be expressed in terms of a ratio of close price of the security and depending upon the daily price band slab
applicable for the security, there will be different ratios of add-on price bands as given below-

In the above chart, X is the close price of the security preceding the date of applicability.

"Once the security reaches the respective price limit of a period, trading shall be allowed only within the respective prescribed price range and the same shall not be revised till the beginning of the next cycle i.e. next Week/Month/Quarter wherein new price limits shall be computed for the respective periods," BSE said

The final upper daily price band shall be the minimum of all individual upper price band limits and the final lower daily price band shall be the maximum of all individual lower price band limits.

A security placed in Add-on Price Band Framework shall remain in the framework for a minimum period of 90 calendar days and shall
be eligible to move out if it does not qualify the provisions of the above framework thereafter. Review of the shortlisted securies under the
framework i.e. inclusion/exclusion shall be carried out on monthly basis.

Market participants may note that the above framework shall be in conjunction with all other prevailing surveillance measures being imposed by the exchanges from me to me.

Also, it may be noted that the shortlisting of securities under the aforesaid framework is purely on account of market surveillance and it should not be
construed as an adverse action against the concerned company/entity.

The provisions of this circular shall come into effect from August 23, 2021.