SEBI: No Manipulation Found in New Closing Auction Session
By Market Desk
SEBI Chairman confirms no manipulation in the new closing auction session, a key market reform. Regulator seeks feedback to boost participation and align with global standards.
SEBI Chairman Tuhin Kanta Pandey has announced that no evidence of manipulation has been found in the newly introduced closing auction session. This significant market structure reform aims to align Indian markets with global best practices.
Despite initial concerns from some market participants, Pandey affirmed the integrity of the system. He highlighted its importance for passive investing strategies and the accurate valuation of mutual fund Net Asset Values (NAV).
- The system mirrors practices in Japan, Hong Kong, the US, Germany, and Australia.
- SEBI is actively reviewing stakeholder feedback to enhance participation in this transparent mechanism.
Understanding the Closing Auction Mechanism
Stock exchanges implemented this dedicated 20-minute session last week. During this period, buy and sell orders are collected to establish a stock’s closing price.
- Orders are processed to determine the closing price based on the maximum executable volume.
- This new framework replaced the previous method of calculating prices.
- The older system used the weighted average of trades during the final 30 minutes of the regular trading session.
Regulators and exchanges introduced this revised mechanism to foster a fairer, more transparent, and more efficient price discovery process. This is particularly beneficial for managing large institutional orders.