SEBI to soon issue framework on Closing Auction Session: SEBI Chairman

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 PTISEBI in September had proposed changes to the CAS framework and the methodology for determining settlement prices of index and stock derivatives on expiry daysIt 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 3500 comments on its consultation paper October 3 is the deadline to submit the commentsToday 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 amp Capital Market Participants Association of IndiaOn whether a circular on the matter could be expected soon he said Yes it will bePandey said the consultation process was designed to address a specific problem while allowing market participants to suggest different approaches to resolving itSEBI had proposed two options for settlement pricesThe 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 10minute CAS or continuation of the existing CTS VWAP methodologyAt present the closing price arrived at through CAS also serves as the basis for determining settlement prices of derivative contracts on expirySEBIs 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 CASdetermined closing price as the basis for settling derivative contracts on expiryCorporate Bond derivatives marketThe SEBI chief said said regulatory enablement technical infrastructure and market participation would all be important for the corporate bond derivatives market segment to growPandey said the regulator to promote exchangetraded 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 requestforquote mechanism for secondarymarket transactionsBond indices and derivatives will be I would think a major milestone going forward Pandey saidSebi examining position limits for nonagri contracts to boost liquidityFurthermore SEBI is examining position limits for nonagricultural contracts to boost liquidity and depth without weakening risk controlsIn 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 PTISEBI 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 platformsPandey said the market regulator has completed consultations on the matter and will issue guidelinesFPI investmentsHe 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 nonagricultural commodity derivativesPandey said FPIs holdings could rise or fall depending on investment opportunities across marketsAll we can do at the regulatory stage is to listen to what the FPIs have to say ease their onboarding and access he saidWith inputs from PTI