How Sebi plans to change closing math

Sebi said in a circular that CAS will be implemented in the equity cash markets, bringing India at par with global markets.

- Apoorva Ajith

Sebi said in a circular that CAS will be implemented in the equity cash markets, bringing India at par with global markets.

(REUTERS)

The Securities and Exchange Board of India (Sebi) has asked stock exchanges and clearing corporations to implement a Closing Auction Session (CAS), a change that will alter how closing prices are determined in the equity market.

In a circular issued on Friday, the market regulator said that CAS will be implemented in the equity cash markets, bringing India at par with global markets. The move aims to improve price integrity and reduce volatility near market close.

Mint explains what a closing auction session is and why it matters.

A closing auction framework determines a stock’s closing price through an auction rather than continuous trading. During the auction window, all buy and sell orders are collected together, and the system finds a single price at which the maximum number of shares can be traded.