The Securities and Exchange Board of India (SEBI) has decided to introduce the call auction mechanism in the pre-open session. The pre-open session will be introduced on a pilot basis by BSE and NSE for the components of benchmark indices Sensex and Nifty, reports CNBC-TV18's Priyal Guliani.
SEBI will introduce call auction in pre-open session from 9:00 - 9.15. The pilot project is restricted to only 50 stocks of Nifty and Sensex. Between 9-9:15 am, market players will be able put in buy and sell order.
This move is introduced to reduce volatility when markets open and also to channelise liquidity. The framework for call auction will reviewed after three months. To introduce the new scheme, stock exchanges will issue necessary guidelines on pre-open session and will also make required amendments in rules.
As per the scheme, there will be 8 minutes for order entry, modification, cancellation, 4 minutes for order matching and trade confirmation while 3 minutes will be allotted to buffer for trade transition.
However session will close randomly during the last minute order entry. The price band of shares will be 20% applicable on seconds during pre-open session. According to it limit orders will be given priority over market orders, while pending unmatched order will be shifted to market order .
Source - http://www.moneycontrol.com/news/market-news/sebi-to-introduce-call-auctionpre-open-session-_470199.html
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