SEBI Chief Tuhin Kanta Pandey Says Closing Auction Session Is Here to Stay, Tweaks Possible
· Free Press Journal
SEBI Chairman Tuhin Kanta Pandey on August 17 said the market regulator is examining concerns surrounding the newly introduced Closing Auction Session (CAS), while making it clear that the mechanism is expected to remain in place.
Pandey said SEBI is studying feedback from market participants and could consider changes after identifying specific problems. He emphasised that improving participation and addressing existing concerns would be important for the system to work effectively.
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SEBI reviews concerns over Closing Auction Session
The CAS is a separate 20-minute trading session introduced last week to determine the final price of stocks. During the session, exchanges collect buy and sell orders and arrive at a closing price at which the maximum possible volume can be executed.
Sensex, Nifty Show Diverging Trade For Second Day After Implementing CAS MechanismThe system replaced the earlier method of calculating the closing price using the average price of trades conducted during the final 30 minutes of the regular trading session.
SEBI introduced the auction mechanism with the aim of making closing prices more transparent and improving execution, particularly for large orders. However, its implementation has raised concerns among some market participants, including issues related to participation and potential losses.
Pandey said SEBI would also examine concerns relating to the portfolio management services (PMS) segment. He added that the regulator was consulting different stakeholders and monitoring feedback, including discussions on social media.
SEBI Finds No Manipulation In New Closing Auction System: Chairman Tuhin Kanta PandeyIndicative prices and participation remain key issues
According to Pandey, the immediate challenge with CAS is not necessarily a lack of transparency but the difficulty some participants face in understanding and adapting to the new mechanism.
Market participants, brokers and trading systems that were designed around the previous closing-price methodology need time to adjust to the new process, he said.
The availability of indicative prices has also emerged as an important issue for traders. Pandey stressed that such information is crucial for market participants and said CAS should not be judged based on day-to-day movements.
Several brokers have already begun displaying indicative prices on their websites, while more major brokerages are expected to provide the information through their mobile applications.
SEBI is continuing to monitor the mechanism and assess feedback. Pandey said the discrepancies observed earlier for the Sensex and Nifty had narrowed significantly in subsequent sessions, suggesting that some initial concerns may ease as participants become more familiar with CAS.