Sebi chief says early liquidity glitches in new closing auction are typical worldwide
Sebi Chairman Tuhin Kanta Pandey noted that the initial rollout of the closing auction session has caused lower liquidity in several markets, but affirmed the system will remain in place.
At the Global Fintech Fest, Securities and Exchange Board of India Chairman Tuhin Kanta Pandey said that the initial implementation of the closing auction session (CAS) has led to lower liquidity in several global markets, a pattern also seen in the US, Japan and Hong Kong. He reassured that CAS is a permanent feature, though the regulator will issue a consultation paper on revising the settlement-price calculation for derivatives.
Participants have praised the technical rollout but flagged the price-dependency of settlement as a concern. Proposed adjustments include tighter auction price bands, overlapping derivative sessions, or using volume-weighted average prices. Pandey also described Sebi's deployment of AI tools—such as Sudarsan, R(AI)DAR, and the Cybersecurity Audit Compliance Portal—to enhance off-site, near-real-time supervision while warning against over-reliance on AI. He emphasized the need for robust oversight and capability building among supervisors.
