SEBI chief says manipulation of closing auction session will face stern action
The regulator has stepped up its defence of the new market mechanism amid concerns from participants over its implementation and initial challenges.
SEBI Chairman Tuhin Kanta Pandey cautioned on Wednesday that any manipulation efforts aimed at undermining the recently implemented closing auction session (CAS) will be met with severe consequences. Since the CAS debut on August 3, market participants have voiced numerous concerns. Pandey affirmed that SEBI's capacity to detect manipulation within CAS is superior to that of the earlier volume weighted average price system (VWAP).
He remarked, "CAS is about transparency. Those who think they can manipulate CAS to tarnish the new system must be wary, as we can catch such behavior." Notably, Pandey mentioned a rise in CAS framework participation, specifically referencing mutual funds and proprietary traders as key adopters. He expressed optimism that this trend will continue to grow.
On August 12, Pandey had asserted that SEBI had not detected any manipulation in CAS since its launch, while on Tuesday, he reiterated that the new framework marks a significant reform expected to remain permanent. The CAS model, akin to those adopted by major international markets over the past two years, aims to curb market manipulation and enhance transparency.
Under CAS, buy and sell orders are consolidated for an auction-style matching process during a specific post-trade window. The SEBI chief acknowledged initial "teething troubles" and urged participants to invest more in understanding CAS and upgrading their technology systems to accommodate it.
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