Sebi Chief Confirms Closing Auction Session Framework to Remain
India's Securities and Exchange Board (Sebi) Chief Tuhin Kanta Pandey reaffirmed the closing auction session (CAS) will continue as a permanent market feature, acknowledging that initial liquidity concerns have shown improvement in line with trends observed in other markets. The regulator plans to issue a consultation paper on the CAS framework shortly, while some market participants have reported positive experiences during major index rebalancing events, though certain segments face challenges related to settlement price dependency.
Sebi chief Tuhin Kanta Pandey confirmed the closing auction session will remain a permanent fixture in India's equity market structure. The announcement addressed concerns raised by market participants since the CAS implementation, with Pandey noting that liquidity conditions, which were initially a point of concern, have demonstrated improvement over time—a pattern consistent with experience in other markets that have adopted similar mechanisms.
According to reports, the regulator intends to release a consultation paper outlining the detailed framework for the CAS framework in the coming period. Market feedback on the implementation has been mixed. Some participants, particularly institutional investors, have praised the mechanism's execution, noting its utility during significant corporate action events such as MSCI index rebalancing exercises. However, the announcement also acknowledged that certain market segments continue to face operational impacts, particularly those whose positions or strategies depend heavily on settlement pricing mechanisms.
The closing auction session represents a structural change aimed at enhancing price discovery and orderliness in market closing procedures. Sebi's continued commitment to the framework suggests the regulator views the mechanism as beneficial for market integrity despite initial teething problems. The upcoming consultation paper will likely provide refinements addressing liquidity distribution and settlement-related concerns raised by affected participants, potentially including enhanced transparency measures or adjusted participation rules to better accommodate diverse market segments.
Source: Markets-Economic Times
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