World · India Bureau
Sebi to reassess CAS methodology after market backlash over derivatives pricing
India's markets regulator has announced a review of the newly introduced Commodity and Asset Spot (CAS) mechanism used to settle derivative contracts, following strong industry opposition to the pricing methodology.
LSN India ·
The Securities and Exchange Board of India (Sebi) will conduct a comprehensive review of the CAS methodology implemented for determining settlement prices in derivative contracts, the regulator said, responding to mounting concerns from market participants.
The move comes after widespread criticism of the new mechanism since its rollout. Market participants and industry bodies have raised concerns about the pricing methodology's impact on contract settlements, arguing that the current approach may not accurately reflect market conditions or fair value.
Sebi has indicated that the review will examine the technical aspects of the CAS calculation framework and assess feedback from stakeholders including exchanges, brokers, and trading participants. The regulator aims to evaluate whether adjustments are needed to ensure the mechanism functions effectively and maintains market integrity.
The review is expected to address specific issues raised by market participants regarding price discovery and the practical implementation of the settlement mechanism. Sebi has not yet announced a timeline for completing the review or publishing its findings.
This development represents a significant step by the regulator to address market concerns while maintaining its commitment to modernising India's derivatives settlement infrastructure.