SEBI releases guidelines to manage impact on stock price due to market rumours

Capital markets regulator SEBI has released guidelines for managing the impact of stock prices due to market rumours. As per Business Standard, SEBI has introduced a concept of unaffected stock price to reduce any artificial fluctuations in stock price.

SEBI has said that the entity will need to verify or respond to the rumours, if there is a material movement in price. A SEBI circular dated January 25th, says that the requirement to verify market rumours will apply to the top 100 listed entities effective June 1st 2024 and top 250 listed entities effective December 1st 2024.

Stock exchanges will issue the framework for material price movement on their websites.

The Securities and Exchange Board of India (Sebi) has sought comments from the public till June 11 on the proposals.

With regards to buyback norms, the committee has suggested allowing conversion of ESOPs or convertible instruments if the exercise or conversion date falls within the buyback period. Also, it has been suggested to disclose details of outstanding ESOPs and convertible instruments in the public announcement.

The current rules prohibit issuing any shares or securities, including bonus shares, until the buyback period ends.