NSE introduces 20% lower price cap for SME IPO pre-open session from August 4

The National Stock Exchange (NSE) on Wednesday said it will introduce a lower price cap of 20 per cent below the issue price for SME initial public offerings (IPO) during the special pre-open session which will be effective on August 4.

The move came after an earlier circular issued on July 4, 2024, wherein the NSE had introduced an upper cap of 90 per cent over the issue price during the special pre-open session for Small and Medium Enterprises IPOs.

“To standardize the opening price discovery/ equilibrium price during the special pre-open session across exchanges, exchange (NSE) is introducing a floor (lower band) of 20 per cent below the issue price during the special pre-open session for SME IPOs,” the NSE said in a circular.

Accordingly, the special pre-open session for SME IPOs on the NSE Emerge platform will have an upper band of 90 per cent over the issue price and a lower band of 20 per cent below the issue price.

The price control mechanism will be implemented from August 4, 2025. It will be applicable only to SME IPOs listed on the NSE Emerge platform and will not apply to mainboard IPOs, relisted securities or public debt, NSE said.

According to experts, the price mechanism of upper and lower band will now limit extreme volatility in the initial trading of SME shares.