Over 3,500 responses on CAS: Sebi to quickly move ahead with proposals
In a significant announcement, Sebi chairman Tuhin Kanta Pandey revealed transformative changes to the Closing Auction Session mechanism. This initiative is driven by the feedback of over 3,500 participants who responded to the consultation paper. Apart from updating settlement prices for index and stock derivatives, Sebi aims to invigorate the corporate bond derivatives market, fostering both…
Sebi chairman Tuhin Kanta Pandey announced on Saturday that the market regulator will swiftly advance with its proposed modifications to the Closing Auction Session (CAS) mechanism following the receipt of over 3,500 responses to its consultation paper. The regulator had solicited feedback on amendments to the CAS, market timings, and settlement methods for derivative contracts with a submission deadline of October 3.
During an event organized by the Commodity & Capital Market Participants Association of India, Pandey stated that Sebi would promptly review the comments and proceed with the proposals, asserting that the consultation process would not necessitate an extended analysis period. The chairman emphasized that the CAS review was initiated in September, alongside changes to the methodology for determining settlement prices of index and stock derivatives on expiry days.
The review was prompted by the introduction of CAS in the equity cash segment and concerns regarding its impact on settlement prices in derivatives.
Pandey explained that the consultation aimed to address specific issues and invited market participants to propose alternative approaches. He also discussed the development of the corporate bond derivatives market, highlighting that its growth would depend on regulatory support, technical infrastructure, and market participation.
Sebi is striving to foster exchange-traded systems in the bond market, having already implemented an electronic bidding platform for primary issuances, regulations for online bond platform providers, and an enhanced request-for-quote mechanism for secondary-market transactions. Pandey emphasized that bond indices and derivatives would be a significant milestone in the future.
Regarding foreign portfolio investor (FPI) access, Pandey outlined the regulator's focus on simplifying onboarding and access to Indian markets. While investment decisions ultimately hinge on returns and opportunities across countries, Sebi is collaborating with the Reserve Bank of India (RBI) to facilitate FPI participation. The regulator has taken steps such as permitting FPIs to engage in non-agricultural commodity derivatives.
Pandey noted that FPI holdings would fluctuate based on investment opportunities in various markets, and the regulatory role involves listening to FPI feedback and easing their onboarding and access.
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