The Securities and Exchange Board of India (SEBI) plans to observe the functioning of its revised Closing Auction Session (CAS) framework for at least one year before considering further regulatory changes.
As per a report by NDTV Profit, SEBI Whole-Time Member KVR Murty outlined the approach following the regulator’s latest amendments to the closing auction mechanism.
The revised framework will take effect on Dec 7, 2026, introducing changes to reference price calculations, permitted order types and trading cut-off timings for derivatives.
Murty said the regulator wanted to assess how the new system operates before determining whether additional adjustments are necessary.
SEBI To Monitor Revised CAS For One Year
Murty said SEBI would adopt a wait-and-watch approach, allowing the revised mechanism sufficient time to stabilise.
The regulator intends to evaluate market activity, trading behaviour and feedback from participants before proposing further amendments.
He emphasised that any future changes would follow consultations with stakeholders.
The latest revisions address concerns raised by traders and other market participants, particularly regarding derivatives contracts approaching expiry.
These issues had prompted calls for adjustments to the closing auction framework.
Murty maintained that SEBI remained open to improvements but would avoid making frequent changes without assessing their practical impact.
The regulator considers CAS an important market mechanism and expects it to remain part of India’s trading infrastructure.
Market Feedback Shapes Revisions
According to Murty, SEBI received responses from approximately 20,000 market participants during its review of the framework.
The regulator also conducted two rounds of public consultation before finalising the revised rules.
Murty said the feedback included several positive responses, alongside concerns about the operation of the auction session.
He indicated that suggestions from investors, traders and other stakeholders had influenced the amendments.
SEBI views the closing auction mechanism as an established practice in international financial markets.
Murty expressed confidence in the revised structure while acknowledging that further refinements might eventually become necessary.
The regulator will continue monitoring the framework’s performance and gathering industry feedback after implementation.
However, it does not intend to introduce immediate additional modifications.
The stated objective is to balance market efficiency, trading stability and participant concerns while allowing the revised system time to demonstrate its effectiveness.