BSE urges all investors to participate in closing auction to strengthen price discovery

The BSE has asked all trading members to encourage participation from all categories of clients in the closing auction session, saying wider participation will strengthen the process of determining closing prices for securities, according to a Bloomberg report.

In a circular issued on Wednesday, the exchange said brokers should display the indicative price generated during the auction to their clients to improve transparency and participation.

The closing auction begins at 3:20 pm and concludes at a random time between 3:28 pm and 3:30 pm. Throughout the auction, the exchange disseminates indicative equilibrium prices for individual securities as well as indicative closing values for benchmark indices.

According to the BSE, participation from retail investors, institutional investors, proprietary traders, market makers and intermediaries is important for ensuring a more robust and efficient closing price discovery process.The exchange’s appeal comes after the recent rollout of the closing auction mechanism, which has increased the influence of auction trades on the final closing prices of stocks and benchmark indices.