How BSE plans to curb volatility in mid, small-caps

To curb excessive volatility in mid and small cap counters, the BSE has introduced a new surveillance measure for certain stocks having a market capitalisation of less than Rs 1,000 crore.

The new measure, add-on price band framework, will be applicable to companies with a market-capitalisation of less than Rs 1,000 crore and on securities in groups -- X, XT, Z, ZP, ZY, and Y, BSE said in a circular on Wednesday.

Under the framework, the shortlisted securities will be subjected to additional periodic price limits of weekly, monthly and quarterly.

These add-on price bands will be in addition to the applicable daily price bands of such securities.

The new framework will come into effect from August 23, the exchange said.

A security placed under add-on price band framework will remain in the framework for a minimum period of 30 calendar days and will be eligible to move out if it does not qualify the provisions of the framework thereafter.

The exchange said that review of the shortlisted securities under the framework --  inclusion or exclusion --  will be carried out on monthly basis.

It further said that shortlisting of securities under framework is purely on account of market surveillance and it should not be construed as an adverse action against the concerned company.

In case of corporate actions of a material nature, like rights issue, bonus issue, merger, amalgamation, takeover etc. the framework shall be applicable on the new adjusted base price.

Further, the exchange has identified an initial list of 31 securities on which the  framework will be applicable with effect from August 23.

These companies include Ashiana Agro Industries Ltd, Cosmo Ferrites Ltd,Garware Synthetics Ltd, Saraswati Commercial India Ltd, Texel Industries Ltd, Siel Financial Services Ltd and Pan Electronics India Ltd.

Photograph: Shailesh Andrade/Reuters