New Delhi, May 22 -- The capital markets regulator, the Securities and Exchange Board of India (SEBI), has proposed changes to the price discovery mechanism used during the pre-open call auction session for IPOs and relisted stocks, citing concerns that the current framework may be distorting prices and suppressing genuine market discovery.

In a consultation document published on Tuesday, SEBI noted that numerous market participants had expressed concerns about the current dummy price band system and the base price determinations for relisted stocks, which were creating artificial market distortions. The regulator indicated that this has frequently led to heightened buying pressure at the start of regular trading, resulting in upper circ...