India’s markets regulator, the Securities and Exchange Board of India (SEBI), has found no evidence of any manipulation in the newly introduced closing auction session (CAS), SEBI Chairman Tuhin Kanta Pandey said on Wednesday, amid concerns from some market participants about the new system.
Speaking at an event in Mumbai, Pandey backed the new mechanism and described it as a major change to India’s market structure. He said the system brings Indian markets closer to practices followed in several major global markets.
“CAS is a very big microstructure reform, and we are actually behind it. Many of our global counterparts have already done it. Japan did it in 2024. Hong Kong has done it. It is in the US, in Germany, in Europe, and in Australia. So, this is a very important thing. Whatever index you do, for passive investing and NAV values of mutual funds, you need a price,” he stated.
The SEBI chief said the regulator is looking at feedback from brokers and other market participants and is open to making changes that could bring greater participation in the closing auction.
“Now, we need to increase participation. More and more people should understand it. Brokers, many brokers have indicated prices. So basically, the issue is that participation should increase in CAS. CAS is a transparent market; its pricing is always visible, what is happening inside it is visible, and finally, it makes a price. So, SEBI is talking to different people, and we are understanding and considering everyone’s input,” Pandey mentioned.
The closing auction session was introduced by stock exchanges last week and runs for 20 minutes. During this period, buy and sell orders are collected and matched to determine the final closing price of a stock. The closing price is set at the level where the highest possible volume of orders can be matched.
The new mechanism replaces the earlier system, under which a stock’s closing price was determined using the weighted average price of trades carried out during the last 30 minutes of the regular trading session.
SEBI and stock exchanges have said the new system is aimed at making closing-price discovery more transparent and efficient. It is also expected to help handle large institutional orders more effectively.
