Sebi Extends Deadline for Closing Auction Session Proposal

New Delhi, Sep 12 (PTI) Markets regulator Sebi on Friday extended the deadline by a week till September 19 for public comments on its consultation paper proposing the introduction of a closing auction session (CAS) in the equity cash segment.

The regulator had released the consultation paper on August 22. Earlier, Sebi had invited comments from stakeholders and the public by September 12.

"Based on the representations received by SEBI, it has been decided to extend the timeline to submit the public comments on the said consultation paper till September 19, 2025," the Securities and Exchange Board of India (Sebi) said in a notice.

Last month, Sebi issued a consultation paper proposing a new framework for the CAS in the equity cash market, starting with highly liquid derivative stocks to determine the closing prices of shares.

The proposal, if implemented, is expected to reduce volatility, improve fairness, and make it easier for large and passive investors to execute trades.

In its consultation paper, Sebi proposed that CAS would be applied in a phased manner, beginning with stocks available in the derivatives segment-- those with sufficient liquidity--and later extended to all stocks based on experience gained.

A closing auction session is a short trading period held at the end of the day to determine the final price of a security.

Sebi proposed that the session will be held separately for 20 minutes, from 3:15 pm to 3:35 pm, unlike an earlier proposal that suggested conducting it after market hours, between 3:30 pm and 3:45 pm.

The session would be divided into four phases -- reference price calculation, order entry, random close, and final matching.

Index derivatives would continue to close at 3:30 pm, while near-month stock derivatives would close at 3:35 pm on expiry days.

To maintain orderly trading, CAS will operate within a 3 per cent up or down band of the reference price, determined using the VWAP of trades between 3 pm and 3:15 pm.

Execution rules will also change, with market orders receiving priority over limit orders--unlike in the pre-open session. Any unexecuted limit orders from the continuous session will automatically move to CAS but cannot be modified, only cancelled.

To enhance transparency, Sebi has proposed the dissemination of real-time data during CAS. This would include the indicative equilibrium price, cumulative buy and sell quantities, and imbalance data-- both total and specific to market orders-- helping participants make better-informed decisions.