03 October,2026 04:18 PM IST | New Delhi | mid-day online correspondent
Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey. File picture
Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Saturday said the market regulator will examine the concerns Closing Auction Session (CAS) mechanism and will soon issue a framework on proposed changes, reported news agency PTI.
SEBI in September had proposed changes to the CAS framework and the methodology for determining settlement prices of index and stock derivatives on expiry days.
It had sought public comments on its proposal to review certain aspects of the CAS, market timings and the settlement methodology for derivative contracts and has received over 3,500 comments on its consultation paper. October 3 is the deadline to submit the comments.
"Today is the last date, and we will actually quickly look at all these comments and go ahead, because I think our proposals are quite clear," Pandey said at an event organised by Commodity & Capital Market Participants Association of India.
On whether a circular on the matter could be expected soon, he said, "Yes, it will be".
Pandey said the consultation process was designed to address a specific problem while allowing market participants to suggest different approaches to resolving it.
The market regulator, in a consultation paper had proposed two options for determining the settlement prices. One is a blended Volume Weighted Average Price (VWAP) based on trades executed during the last 30 minutes of the continuous trading session (CTS) and the 10-minute CAS, or continuation of the existing CTS VWAP methodology.
At present, the closing price arrived at through CAS also serves as the basis for determining settlement prices of derivative contracts on expiry.
SEBI's proposal came amid concerns about the CAS, with market participants flagging liquidity issues and sharp volatility in the benchmark indices post the implementation of CAS on August 3. The proposed changes are aimed at addressing concerns around the use of the CAS-determined closing price as the basis for settling derivative contracts on expiry.
The SEBI chief said said regulatory enablement, technical infrastructure and market participation would all be important for the corporate bond derivatives market segment to grow.
Pandey said the regulator to promote exchange-traded systems in the bond market, has already taken steps such as introducing an electronic bidding platform for primary issuances, regulating online bond platform providers and strengthening the request-for-quote mechanism for secondary-market transactions.
"Bond indices and derivatives will be, I would think, a major milestone going forward," Pandey said.
Furthermore, SEBI is examining position limits for non-agricultural contracts to boost liquidity and depth without weakening risk controls.
In some agricultural commodities, physical settlement from the outset can impede market development, and a phased approach could allow contracts to mature before physical settlement becomes mandatory, as per PTI.
SEBI is also working to reduce structural friction in commodity markets, including engaging with stakeholders on goods and services tax (GST) related issues affecting participants who trade in commodities through exchange platforms.
Pandey said the market regulator has completed consultations on the matter and will issue guidelines.
He further said SEBI was working with the Reserve Bank of India (RBI) on measures to further ease access for foreign portfolio investor (FPIs) and noted that the regulator had already taken several steps, including allowing easier onboarding and access to Indian markets, access to non-agricultural commodity derivatives.
Pandey said FPIs' holdings could rise or fall depending on investment opportunities across markets.
"All we can do at the regulatory stage is to listen to what the FPIs have to say, ease their onboarding and access," he said.
(With inputs from PTI)
