‘Broken overnight’: How stock market’s new closing auction is making traders jittery
India's stock market has faced volatility following the introduction of a new closing price auction system. Despite trader complaints and calls for a rollback, the Securities and Exchange Board of India (SEBI) maintains that the system is necessary and will stabilize as market participants adjust.
Why it matters
Market structure reforms are critical for financial stability, and their implementation can significantly impact investor confidence and trading behavior.
India’s newly introduced closing price auction system has left traders jittery as they adjust to the new system. During the first week of trading under the new system, some traders said that one of the country's most significant market structure reforms in recent years was failing to deliver as intended.With demands mounting for the new mechanism to be withdrawn, the market regulator convened meetings with several of India's leading stock brokerages and made its position unequivocal: the closing auction will not be rolled back.People familiar with the private discussions told Bloomberg that senior Securities and Exchange Board of India (SEBI) officials, including board member K.V.R Murty, told market participants that the system was experiencing only early-stage teething problems and expressed confidence that its functioning would improve as more investors participated.Also Read | Will Nifty & Sensex continue to diverge?
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