SEBI to likely stop using closing auction session for derivatives settlement prices
GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims·
Why in news
SEBI is likely to stop using the closing auction session (CAS) to calculate derivatives settlement prices to prevent sharp price swings on expiry days.
Background
SEBI received 20,000 suggestions regarding the August mechanism and September review plans. The regulator plans to switch to using the volume-weighted average price (VWAP) of the last 30 minutes of trading for derivatives settlement.
Facts for Prelims
- BodySEBI: Securities and Exchange Board of India
- FactVWAP: Volume-weighted average price of the last 30 minutes of trading will be used for derivatives settlement
- FactCAS: Closing Auction Session is used for stocks with linked futures and options contracts
- FactLess liquid cash markets: Closing auction will still be used to determine end-of-day prices
For Mains
Q. Discuss the implications of using volume-weighted average prices versus closing auctions in determining derivatives settlement prices for market stability.
Dimensions to cover in your answer
- Volatility mitigation: Reducing sharp price swings in derivatives on expiry days caused by auction-based pricing
- Market alignment: Aligning Indian settlement mechanisms with US and European market standards
- Liquidity considerations: Differentiating pricing mechanisms between highly liquid and less liquid cash markets
Keywords: market volatility · derivatives settlement · volume-weighted average price · regulatory oversight · price discovery
More Economy notes
- Indian Navy aims to build 230 surface combatants and submarines by 2037 · 12 October 2026
- India's richest 10% earn $10 daily, less than poorest 10% in four nations · 12 October 2026
- Telangana to reconsider ₹8,500 monthly pass fees for Hyderabad Metro and TGSRTC services · 12 October 2026
- Cochin Shipyard to commission Mangrol with 80 per cent indigenous content for Indian Navy · 12 October 2026
- RBI introduces measures to stabilize rupee as it falls near 96.96 against dollar · 12 October 2026
- RBI opens special dollar window for Indian Oil, Bharat Petroleum and Hindustan Petroleum · 12 October 2026
Something wrong, or something missing?
Spotted a mistake in a note, or want a topic, format or PDF that would help your preparation? Write to us. We read every mail and fix errors fast.
This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.