SEBI Introduces New Closing Auction Session for Market Transparency

SEBI has introduced a closing auction session (CAS) for the equity cash segment to enhance transparency in closing price discovery. The new framework is set to be implemented gradually, initially targeting stocks with derivative contracts, aligning with global practices by aggregating market interest into a single liquidity pool.

The Securities and Exchange Board of India (SEBI) announced the introduction of a closing auction session (CAS) in the equity cash segment, aiming to make closing price discovery more transparent and robust. This strategic move aligns with global practices, consolidating market interest into a single liquidity pool.

CAS will be employed in phases, initially applying to cash market stocks with derivative contracts, while the existing volume-weighted average price (VWAP) method will remain for other stocks. The CAS session, running from 3:15 pm to 3:35 pm, promises improved execution efficiency, supporting fair settlement and facilitating passive funds.

Key features include a 20-minute session post-continuous trading, alignment with price bands, and prioritization of market orders. Settlement prices for stock and index derivatives will derive from CAS, commencing on August 3, 2026. SEBI has mandated exchanges and clearing corporations develop operating procedures within 30 days, ensuring smooth adoption of the CAS framework.

(With inputs from agencies.)