SEBI chief rules out reversing closing auction mechanism

SEBI chairman Tuhin Kanta Pandey has said the new Closing Auction Session (CAS) for F&O stocks is here to stay and will not be rolled back. Speaking in Mumbai on Monday, Pandey said the regulator is open to making adjustments based on stakeholder feedback but will not reverse the mechanism introduced on August 3. The new system ends continuous trading in F&O stocks at 3:15 pm and determines the closing price through an auction, replacing the earlier volume-weighted average price method.

Pandey said SEBI is analysing data, social media discussions, and feedback from market participants. He added that the discrepancies seen on the first day of CAS have narrowed. The regulator will issue a consultation paper "very soon" on revamping the securities lending and borrowing mechanism (SLBM), which is expected to improve participation in CAS. On criticism that CAS affects options trading, Pandey said options trading alone cannot drive market policy.

The Economic Times reports that SEBI has not found concerns relating to tracking errors in CAS. The Hindu notes that several industry participants have welcomed the change, though some market participants are yet to upgrade systems built around legacy processes. The new framework aims to improve price discovery and market efficiency.