Here's All You Need To Know About SEBI's New Price Band Rules For Scrips In Derivatives

SEBI has revamped price band formulation in derivatives to tackle sudden price movements and errors. Dynamic price bands limit stock or derivative price changes within a day, preventing extreme volatility. Starting at 10% of the previous day's closing price, bands can adjust by 5% based on specific trading conditions, now requiring more trades and participants for adjustments. Cooling-off periods have been extended, and flexing percentages reduced to manage volatility. Sliding price bands adjust in both directions, cancelling orders outside the new band. Options trading sees temporary price adjustments during cooling-off periods. These changes aim to enhance market safety, reduce the impact of large trades, and provide participants with more time to react to price shifts, maintaining orderly trading.