SEBI Chief Reaffirms Commitment to Closing Auction Session Amid Participant Concerns

The Closing Auction Session (CAS) is a 20‑minute block introduced last week. Exchanges use it to collect buy and sell orders and determine a stock’s closing price where the maximum volume can be executed. On August 17, SEBI Chairman Tuhin Kanta Pandey said the regulator is analysing the concerns raised by market participants. He added that SEBI will soon present a view on possible changes. Pandey assured that CAS will remain a part of trading, with higher participation being the key to improving the system. He stressed that resolving existing issues is essential for its success. He warned that CAS cannot be monitored on a day‑to‑day basis and that unnecessary problems should not be created in the market. Indicative prices, he said, are very important for traders. The new mechanism replaced the earlier method that used the average price of trades in the final 30 minutes of regular trading. It was designed to provide a fairer and more transparent closing price. It also aims to improve execution efficiency for large orders. Some market participants worry that CAS could thin participation and cause losses for certain players. These concerns have prompted SEBI to review the system closely. Pandey said SEBI will investigate problems on the PMS front for CAS. The regulator is consulting stakeholders, gathering input, and monitoring feedback, even on social media. If adjustments or improvements are needed, they will be considered. He noted that the discrepancies observed on August 3 have narrowed significantly for both the Sensex and the Nifty. This shows the mechanism is stabilising. The immediate challenge, according to Pandey, is not the transparency of the mechanism but the lack of understanding and ease of participation. Participants need time to become familiar with the new process. Trading algorithms built around the earlier methodology must also adapt. Several brokers have already started displaying indicative prices on their websites. More large brokers are expected to provide this information through their apps.