India's markets regulator sees no manipulation in stock closing auction, chief says

India’s markets regulator, the Securities and Exchange Board of India, has found no evidence of manipulation during the recent introduction of the closing auction session, according to chairman Tuhin Kanta Pandey. Speaking at an event in Mumbai, Pandey stated that the regulator is actively seeking ways to boost participation in the new system.

The closing auction, a market structure reform aligned with global norms, is an additional 20-minute session held each day. During this period, exchanges gather buy and sell orders to establish a stock's closing price at a level where the highest volume can be executed. This replaces the previous method of determining closing prices based on the average trade price in the final 30 minutes of regular trading.

The new system aims to provide a fairer and more transparent closing price while enhancing efficiency for large orders. Although concerns have been raised about declining participation and potential losses for some market players, the regulator is not planning to review the change immediately. Participation levels have shown improvement, with mutual funds' involvement increasing from approximately 5%-6% on the inaugural day to around 20%-25% since then. The reform was introduced to minimize tracking error for passive funds.