BSE urges brokers to widen participation in closing auction session

The exchange has asked brokers to promote investor participation, display indicative equilibrium prices and strengthen order-routing tools to improve price discovery under the new closing auction fram

BSE on Wednesday urged brokers to encourage greater investor participation in the Closing Auction Session (CAS) as the exchange sought to improve price discovery following the rollout of the new closing price mechanism for futures and options (F&O) stocks.

 

The exchange also asked brokers to prominently display indicative equilibrium prices of stocks and indices during the auction session on their trading platforms and mobile applications, besides offering smart order routing and best-execution mechanisms across exchanges. It also advised brokers to educate clients and dealing teams on the significance and functioning of the CAS framework.

 

The exchange said the CAS is open to all categories of investors, including retail and institutional participants, and that wider participation would help make closing prices more efficient, transparent and representative of market demand and supply.

 

 

It noted that the closing prices determined during the CAS are used to calculate benchmark indices and for the mark-to-market settlement of derivatives contracts.

 

The advisory comes as the new closing auction mechanism has drawn scrutiny after sharp price swings in the initial days of implementation. Market participants have largely attributed the volatility to low participation in the closing auction.