SEBI Chairman Tuhin Kanta Pandey announced that the Closing Auction Session (CAS) will remain a permanent fixture of the market [1].
The decision comes amid industry concerns that the auction system has contributed to low liquidity during critical trading windows. Because the CAS affects how final prices are determined, the regulator's refusal to roll back the system signals a commitment to this specific mechanism for price discovery.
Pandey said the regulator is not planning to remove the system despite the feedback from market participants [2]. Instead, the agency will focus on implementing data-driven improvements to enhance the current framework [1].
Market participants have raised concerns that the auction process may hinder the fluid movement of trades at the end of the day. The SEBI chief said the regulator remains open to feedback as it seeks to optimize the session [2].
The agency intends to use specific market data to identify where the bottlenecks in participation occur. By analyzing these patterns, SEBI aims to implement tweaks that could increase liquidity, and ensure more robust market participation [1], [2].
This approach suggests that while the structure of the Closing Auction Session is non-negotiable, the operational details are subject to change. The regulator will continue to monitor how the system impacts price volatility and trade execution efficiency.
“The Closing Auction Session (CAS) will remain a permanent fixture of the market.”
By maintaining the Closing Auction Session, SEBI is prioritizing a structured, auction-based price discovery mechanism over the traditional continuous trading model for market closes. The focus on 'data-driven improvements' indicates that the regulator believes the current liquidity issues are operational rather than systemic, suggesting that future adjustments will likely target technical parameters rather than the fundamental existence of the CAS.
