SEBI suggests material event to be considered for rumour verification in new consultation paper

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Also Read: Sebi extends timeline for verification of market rumours by listed entities According to the paper, the top 100 listed companies will have to verify market rumours from February 1, 2024, while the top 250 firms will have to carry out the exercise from August 1, 2024. "The rumour verification requirement was introduced to avoid false market sentiment or impact on the securities of the listed entity.

There may be many rumours circulating in the market which may or may not have a material impact on the securities of the listed entity. Hence, it was envisaged that only rumours about material events or information should require verification by the listed entity," said the consultation paper.

The Indian Standards Forum (ISF) has suggested to define ‘materiality’ in terms of price movement in the scrips of the listed entity since the aim is to ensure prompt verification of rumours that results in a sudden movement in the price of the scrips of the listed entity. Hence, defining ‘materiality’ in terms of price movement instead of material event in terms of regulation 30 of LODR Regulations may be more relevant for the rumour verification requirement,'' said SEBI.