SEBI Overhauls Market Closing Auction Framework; Changes Effective December 7

The Securities and Exchange Board of India (SEBI) has unveiled a comprehensive revision to its Closing Auction Session (CAS) framework, introducing significant changes to trading procedures and settlement mechanisms in the equity markets.

Under the revised structure, the reference price for the closing auction will be determined using the volume-weighted average price (VWAP) of trades executed during the final 15 minutes of continuous trading in the cash market. This methodology represents a departure from previous practices and is designed to enhance price discovery during the crucial closing period of each trading session.

The regulatory overhaul encompasses modifications to order types and timings across the closing auction process. Market participants will need to familiarize themselves with the new operational procedures, which will govern how buy and sell orders are processed during the closing session. The changes also impact settlement arrangements, though specific settlement modifications will take effect simultaneously with the timing and order-type revisions.

Brokerage firms, institutional investors, and retail traders operating in Indian equity markets have been advised to review the detailed regulatory guidance issued by SEBI to ensure full compliance with the new framework. The regulator stated that the revisions are intended to strengthen market efficiency and improve transparency during closing transactions.

Market participants are urged to contact their respective brokers and service providers for clarification on implementation details and potential impacts on their trading strategies prior to the December 7 commencement date.