Sebi Confirms Permanent Status for New Closing Auction Session

The Securities and Exchange Board of India (Sebi) chairman, Tuhin Kanta Pandey, announced Monday that the new Closing Auction Session (CAS), launched on August 3, is now a permanent feature.

Speaking at the launch of cyber reporting platforms at the NISM, Pandey confirmed that while the CAS is set to remain, the regulator remains open to receiving industry suggestions for potential improvements or adjustments.

Understanding the Closing Auction Session

The CAS marks a significant shift in market operations, providing a standardized mechanism for trade execution at the close of trading hours.

Pandey highlighted that the system has been well-received by numerous industry participants due to its core benefit of offering a single price for trade execution. This approach contrasts sharply with the previous system, which relied on a derived price based on the volume-weighted average price (VWAP) system.

Addressing Implementation Challenges

Despite the positive reception from many, some market participants are still in the process of updating their older systems.

These legacy systems were originally designed around the historical VWAP framework, requiring adaptation to the new CAS.

Pandey described the CAS as a major microstructure change for the market, attributing initial “teething problems” to the industry’s slow adoption.

Many in the industry had anticipated that such a significant change would be postponed, leading to delays in system updates. Despite these initial hurdles, Pandey confirmed no concerns have been raised regarding tracking error with the new system.

Sebi’s commitment to the CAS underscores its intent to streamline trade execution at market close, aiming for a more efficient and standardized market environment. The regulator’s openness to industry suggestions indicates an ongoing process of refinement for this significant market microstructure change.