Sebi revises proposal on close auction session for equity cash segment

Sebi's revised proposal on close auction session (CAS) for equity cash segment includes a 20-minute session and expands its applicability to stocks with sufficient liquidity

The Securities and Exchange Board of India (Sebi) on Friday proposed tweaks to its initial draft on the close auction session (CAS) for cash equity. In the revised proposal, Sebi said that initially, it would be applicable only to the stocks that are available in the derivative segment—those which have sufficient liquidity. It may be extended to other scrips at a later stage following feedback.

 

Sebi noted that as passive funds typically track a broad spectrum of indices, if CAS is implemented only for benchmark index constituents, then many stocks in the indices may still continue to have their closing prices determined by the volume-weighted average price instead of CAS. This could lead to a mixed regime and complicate the execution.

 

In the revised proposal, the regulator has also extended the timings. CAS may be implemented as a separate session of 20 minutes, from 3:15 to 3:35 pm. Further, it may be split into four sessions.