BSE-Periodic Call Auction
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Introduction of Periodic Call Auction for illiquid Securities

SEBI vide circular no. CIR/MRD/DP/6/2013 dated February 14, 2013 issued guidelines for trading in the illiquid Securities through Periodic Call Auction Mechanism which was introduced at BSE w.e.f. April 8, 2013. Stock Exchanges identify illiquid Securities at the beginning of every quarter and move such Securities to periodic call auction mechanism.

SEBI, based on recommendations of SMAC and feedback received from market participants and Stock Exchanges, vide its Circular No. CIR/MRD/DP/38 /2013 dated December 19, 2013 rationalized the periodic call auction mechanism introduced vide its circular dated February 14, 2013 as under:

a ) A Security which trades in the normal market and is not shifted to trade for trade settlement, shall be classified as illiquid on a stock exchange if the following conditions are met:

  i]  Average daily turnover of less than Rs.2 lakhs calculated for previous two quarters

   ii] The Security is classified as illiquid at all Exchanges where it is traded

b ) Of the Securities identified as per above criteria , Securities which satisfy any of the following conditions shall be excluded :

   i]  Securities with average market capitalization more than Rs.10Cr.

   ii] Securities where company is paying dividend in at least two out of last three years.

   iii] Securities where company is profitable in at least 2 out of last 3 years, and not more than 20% of promoters shareholding is pledged in the latest quarter and book value is 3 times or more than the face value.

Trading members are advised to exercise additional due diligence while trading in these securities either on own account or on behalf of their clients.

Trading Members are requested to note the penalty criteria for certain trades:

In the event where maximum of buy price entered by a client (on PAN basis) is equal to or higher than the minimum sell price entered by that client and if the same results into trades, a penalty shall be imposed on such trades. The penalty shall be calculated and charged by the exchange and collected from trading members on a daily basis. Trading members may recover such penalty from clients. The penalty so collected shall be deposited to Investor Protection Fund.

Penalty for each such instance per session will be higher of the following:

  • 0.50% of the trade value for sale and 0.50% of trade value for the buy, resulting in 1% penalty for the client on PAN basis.
  • 2500 /- for the buy trade and 2500 /- for the sell trade, resulting in penalty of 5000/- for the client on PAN Basis