The Securities and Exchange Board of India (Sebi) on Thursday proposed a new framework to harmonise price bands and pre-open auction reference prices for stocks listed on multiple exchanges, seeking to address price differences in illiquid shares.The move is aimed at improving price discovery and liquidity in illiquid stocks by preventing artificial price divergences across exchanges on account of lagging closing prices. At present, stock exchanges take the previous day's closing price of the scrip as the base price for the pre-open session of a scrip, and the price bands are applicable on the said base price.Stock exchanges usually implement uniform price bands for scrips trading across the exchanges in a coordinated manner. The stock-wise price bands are applicable independently on individual stock exchanges based on their respective closing prices. However, currently, there is no mechanism to adjust the price bands on the stock exchanges where there is no trading on the previous day, which leads to progressive divergence."In respect of a few illiquid scrips, it has been observed that non-trading of scrip on one of the exchanges and a persistent buy-side pressure, along with the practice of application of price band on the previous day closing price has been causing significant price divergence in the closing prices of the scrips across the exchanges," Sebi said in a discussion paper. "Such divergence also holds the potential of non-trading of the scrip on one of the exchanges," it said.To address the issue, the regulator has proposed that when a stock trades on only one exchange, the exchanges where no trading takes place should adopt the closing price from the exchange where the stock was traded for determining the next day's price band and pre-open call auction base price.