SEBI Mulls After-Market Orders for Closing Auction
By Market Desk
India’s SEBI is considering allowing after-market orders (AMOs) during the 3:15 PM – 3:20 PM closing auction window to boost market participation and price discovery.
The Securities and Exchange Board of India (SEBI) is reportedly weighing a proposal to permit brokers to accept After-Market Orders (AMOs) during the initial five-minute transition period of the Closing Auction Session (CAS). This regulatory adjustment aims to enhance market participation and refine price discovery within the recently implemented closing auction mechanism.
Under the proposed change, brokers would be able to collect AMOs between 3:15 PM and 3:20 PM. These collected orders would then be processed and submitted to the market after 3:20 PM, aligning with the start of the CAS order-entry phase.
Understanding the Closing Auction System
The Closing Auction Session, which became effective on August 3rd, operates for cash segment stocks that also possess derivative contracts. This system runs for a twenty-minute window each trading day, from 3:15 PM to 3:35 PM.
- The first five minutes, from 3:15 PM to 3:20 PM, are dedicated to transitioning from continuous trading and calculating a reference price.
- Order entry for the CAS then commences at 3:20 PM, allowing both market and limit orders until 3:25 PM.
- Subsequently, only limit orders are accepted between 3:25 PM and 3:30 PM.
- The session concludes with a random closing between 3:28 PM and 3:30 PM.
- Trade matching and confirmation processes take place from 3:30 PM to 3:35 PM.
Sources familiar with the matter indicate that the implementation of this proposed alteration could potentially begin around September 1. The move underscores SEBI’s ongoing efforts to optimize market operations and accessibility for investors.