After banning several brokers from trading in shares on their debut on the bourses, market regulator SEBI plans to fix a first-day price band for stocks listing after initial public offers to check any irregular movements in the scrips.
"It would be a higher filtre, not a normal filtre, to enable price discovery... We believe on day one, we need price filtre," SEBI Chairman M Damodaran told in New Delhi.
However, it should not affect the effective price discovery mechanism, he added.
SEBI is collecting evidence of excessive price variation on the first day of trading, based on which it will decide whether to impose such filtres on new listings.
Earlier this month, SEBI had issued a draft guideline inviting public comments on imposition of circuit filtres on the first day of re-listing of shares.
"Until now there has not been artificial barriers, no filtres, no circuit breakers at this level because we said let the market discover the price," Damodaran said about the price movements in newly-listed shares.
The regulator last week banned seven brokerages from debut trading in newly-listed shares for their alleged role in huge price movements recorded in stocks like Cambridge Technology, Mindtree and Pyramid Saimira Theatre on their first day of trading.
Some of these stocks witnessed unprecedented jump in their share prices immediately after the listing.