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Sebi chief says closing auction session stays despite liquidity concerns
CAS covers 208 derivative-traded stocks, and its debut on Aug. 3 saw the Nifty50 rise 1.6% versus a 0.7% Sensex gain amid thin trading and sharp late moves.
India’s market regulator, Sebi, said the closing auction session for securities markets is “here to stay for sure,” even as the mechanism has drawn criticism over low liquidity and sharp price swings, according to LiveMint Markets.
Sebi chairman Tuhin Kanta Pandey said Sebi will examine and address constraints in the CAS framework, but ruled out abandoning it because some market participants want to trade options differently. Under CAS, buy and sell orders are pooled during a dedicated end-of-day window and matched at an equilibrium price designed to maximize volume traded and improve price discovery, with India aiming to align more closely with practices in other major markets.
Pandey’s remarks come about two weeks after India introduced its first CAS on Aug. 3. The session currently covers 208 derivative-traded stocks and replaced the volume-weighted average price system for determining closing prices, but its debut was marked by thin trading and unusually sharp moves, including a Nifty50 jump of 1.6% compared with a 0.7% gain in the Sensex.
LiveMint Markets reported that on the first day most domestic traders and retail investors stepped aside from the CAS window, making it the leanest trading period of the day. Pandey also said Sebi’s consultation paper on the securities lending and borrowing mechanism is expected “very soon,” and noted that the agency has formed a working group to revamp the framework after nearly two decades.
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