SEBI Introduced Framework to Determine Unaffected Price in Response to Market Rumour

Current Context: The Securities and Exchange Board of India (SEBI) has introduced a new framework to determine the unaffected price in response to market rumours.

• Here are the key points:
• Unaffected Price: The unaffected price refers to the share price of a company in case there is no market rumour. The unaffected price will be calculated by excluding the price impact of the rumour and its confirmation.
• Volume-Weighted Average Price (VWAP): The adjusted volume-weighted average price (VWAP) will be used for transactions subject to SEBI or stock exchange pricing norms. The adjusted daily VWAP will be calculated by excluding variations attributed to the rumour and its confirmation.
• Rumour Verification: Under Regulation 30 (11) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended in 2024, listed entities are required to verify market rumours when there is a significant price movement.
• Implementation: The new framework will be implemented in stages — starting from June 1, 2024, for the top 100 listed entities, and extending to the top 250 listed entities (including the next top 150) from December 1, 2024.
• Validity: The unaffected price remains valid for 60 or 180 days, depending on the transaction stage, from the rumour confirmation date to the relevant date under existing regulations.

Question:

1. What does the term "unaffected price" refer to in the new SEBI framework?

• A) The share price of a company after the confirmation of market rumours.
• B) The share price of a company without the impact of market rumours and their confirmation.
• C) The highest share price of a company in the last 52 weeks.
• D) The average share price of a company over the past month.

Answer: B) The unaffected price refers to the share price of a company in case there is no market rumour. The unaffected price will be calculated by excluding the price impact of the rumour and its confirmation.