India’s capital markets regulator has found no signs of manipulation in the newly introduced closing auction session, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said on Wednesday, amid concerns raised by some market participants over the new mechanism.
Speaking at an event in Mumbai, Pandey described the closing auction session as a major market structure reform that brings Indian markets closer to global best practices.
He said SEBI is reviewing feedback from stakeholders and remains open to measures that could help increase participation in the new system.
“CAS is a very big microstructure reform, and we are actually behind it. Many of our global counterparts have already done it. Japan did it in 2024. Hong Kong has done it. It is in the US, in Germany, in Europe, and in Australia. So, this is a very important thing. Whatever index you do, for passive investing and NAV values of mutual funds, you need a price,” he stated.
“Now, we need to increase participation. More and more people should understand it. Brokers, many brokers have indicated prices. So basically, the issue is that participation should increase in CAS. CAS is a transparent market; its pricing is always visible, what is happening inside it is visible, and finally, it makes a price. So, SEBI is talking to different people, and we are understanding and considering everyone’s input,” Pandey mentioned.
The closing auction mechanism, introduced by stock exchanges last week, consists of a dedicated 20-minute session during which buy and sell orders are collected to determine a stock’s closing price.
The final price is discovered at the level where the maximum executable volume is matched.
The new framework replaces the earlier methodology under which closing prices were calculated using the weighted average of trades executed during the final 30 minutes of the regular trading session.
Regulators and exchanges have said the revised mechanism is intended to provide a fairer, more transparent, and more efficient price discovery process, particularly for large institutional orders.
