Market regulator Sebi on Thursday proposed changes to the price discovery mechanism through call auction sessions for IPOs and re-listed stocks, seeking to improve price discovery and address concerns around artificially suppressed pricing, PTI reported.In a consultation paper, Sebi suggested revising the methodology used for determining the base price of re-listed stocks.Under the proposal, if trading revocation takes place within six months of suspension, the latest closing price available within six months on the same exchange, or another exchange, would be considered for determining the base price.In cases where recent market prices are unavailable, the lower of valuations provided by two independent chartered accountants or valuation agencies would be used.For revocations taking place after six months of suspension, Sebi proposed that the base price should be determined solely through valuation certificates from two independent valuers that are not older than three months.The regulator has also proposed continuing with the existing dummy price band mechanism but with a more uniform and automated flexing process across exchanges.Under the proposal, the dummy band would automatically expand by 10 per cent whenever the indicative equilibrium price comes within 10 per cent of either boundary.Further, where orders exist only at the upper or lower band, exchanges may automatically widen the range after validating orders from at least five PAN-based unique investors.Sebi also proposed allowing the flexing mechanism to continue during the random closure period between 9.35 am and 9.45 am. Under the current framework, no band expansion takes place during this period.To strengthen price discovery, the regulator proposed that a call auction session would be considered successful only if there are orders from at least five PAN-based unique buyers and sellers.For re-listed stocks and corporate restructuring cases where price discovery fails on the first trading day, the call auction process would continue on subsequent trading days until a valid equilibrium price is established.For IPOs, however, if no equilibrium price is discovered, the stock would move to the normal market at the issue price.The proposals follow representations received by the regulator highlighting that the existing framework for re-listed stocks often resulted in “artificially suppressed price discovery”, leading to persistent buying pressure and repeated upper circuit movements after normal trading begins.Sebi noted that in one instance involving a re-listed stock, nearly 90 per cent of buy orders during the call auction session were rejected because they fell outside the prescribed dummy price bands.The regulator has invited public comments on the proposals until June 11.