SEBI proposes to tweak CAS after industry feedback
SEBI has proposed revisions to the Closing Auction Session (CAS) for stock markets following industry feedback regarding operational issues. The regulator is considering new methodologies for determining expiry-day settlement prices to prevent market misinterpretation.
Why it matters
These regulatory changes are significant for market stability and investor protection, as they directly impact how derivatives and stock prices are settled during high-activity periods.
The Securities and Exchange Board of India (SEBI) has proposed to review expiry-day settlement prices, market timings, order handling and information dissemination under the newly introduced Closing Auction Session (CAS), following industry feedback on initial operational snags.
In a consultation paper released on September 12, SEBI said the existing methodology for determining expiry-day settlement prices for index and stock derivatives needs to be reviewed amid heightened activity in expiring index options and derivatives trading based on the Indicative Equilibrium Price (IEP) during the CAS.
“In view of the hyperactivity in expiring index options contracts along with IEP based derivatives trading during CAS, it is proposed to review the existing methodology for determining the settlement price of both index and stock derivatives contracts on the expiry day,” market regulator said in its consultation paper released on September 12.
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