SEBI proposes new guidelines for market rumour verification

Securities and Exchange Board of India (SEBI) has introduced a consultation paper on December 27, outlining proposed rms for verification of market rumours by listed companies. Under suggested framework, companies will be obligated to verify rumours only if re are significant movements in ir share prices.

responsibility for promptly verifying any rumours related to ir organisations lies with key officials, directors, and executives of concerned companies, according to proposed guidelines.

Starting from February 1, 2024, top 100 listed companies will be required to verify market rumours, with top 250 firms following suit from August 1, 2024. introduction of rumour verification requirement aims to prevent false market sentiment or impact on securities of listed entity.

consultation paper proposes determining material price movement based on a percent variation in stock price, recommending indexing scrip price variation to movement in Nifty50 or Sensex. 

ditionally, if a stock price moves due to multiple factors, including rumours and official anuncements, SEBI suggests attributing material price movement specifically to rumour.

Indian Standards Forum (ISF) has recommended defining 'materiality' in terms of price movement in scrips of listed entity, aligning with objective of ensuring prompt verification of rumours resulting in sudden movements in scrip prices.

SEBI stressed on need for defining 'materiality' in terms of price movement rar than a material event, as outlined in Regulation 30 of LODR Regulations. 

As part of consultation process, SEBI invites comments and feedback on proposed market rumour verification rms, with deline set for January 18, 2024.

A key consideration in SEBI white paper is wher promoters, directors, key manrial personnel (KMP), and senior manment should be mandated to provide equate, accurate, and timely responses to queries or explanations sought by listed entity. This is particularly relevant in cases where rumour or news pertains to KMP or executives, and company requires time to verify information from concerned individuals.