Home / Business and Economy / SEBI Chief: Closing Auction Reform Needs Investor Trust
SEBI Chief: Closing Auction Reform Needs Investor Trust
12 Aug
Summary
- Closing Auction Session reforms aim to reduce manipulation.
- Mutual fund participation in CAS increased significantly.
- SEBI is also working to ease business for FPIs and develop commodity markets.
SEBI Chairman Tuhin Kanta Pandey emphasized that the success of the Closing Auction Session (CAS) hinges on investor participation and the effectiveness of indicative price displays. He described CAS as a crucial micro-structural reform already operational in major global markets like the USA, Japan, and Europe.
Pandey pointed to a notable increase in mutual fund participation in CAS, rising from approximately 7% to over 20%. This enhancement benefits passive funds by enabling single-price NAV calculations and minimizing tracking errors. The new mechanism is designed to curb manipulation often caused by last-minute trades, which previously influenced closing prices and complicated transaction execution.
He defended the reforms, citing a reduction in benchmark index spikes during CAS on both BSE and NSE. Pandey encouraged market participants to be patient with the ongoing settlement of this new reform, indicating a willingness to adjust the framework if necessary. Additionally, SEBI is addressing operational friction points for FPIs and aims to develop the commodity market by expanding investor access and increasing awareness among various market users.
