Sebi's closing auction review draws 20,000-plus responses from market participants

India's capital markets regulator has received over 20,000 responses to its review of the closing auction system, signalling widespread interest in proposed changes to how equities are settled at day's end. The feedback reflects deep concerns among trading community members about potential shifts away from current Volume Weighted Average Price (VWAP) mechanisms.

The International Organization of Securities Commissions-affiliated FIA, representing traders and exchanges globally, has advocated for a 30-minute window using the Closing Time Series-VWAP methodology combined with continuous trading extending to 3:30 pm. This position underscores the technical complexity of implementing new closing mechanisms and the knock-on effects on market operations.

Traders have broadly resisted significant departures from existing VWAP-based systems, citing operational challenges and risk management concerns. The scale of feedback indicates that any final decision by Sebi will require careful calibration to balance market efficiency improvements with industry stability.

The consultation period demonstrates Sebi's commitment to stakeholder engagement on critical market infrastructure decisions. The regulator is expected to analyse responses before finalising any modifications to the closing auction framework, a process that typically takes several months given the technical and operational implications involved.