Mumbai: Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Wednesday warned that the markets regulator would take strict and immediate action against any attempt to manipulate the newly introduced Closing Auction Session (CAS) mechanism.
Speaking on the sidelines of the FICCI Capital Markets Conference in Mumbai, Pandey said the regulator was closely equipped to detect any manipulation under the CAS framework.
“We want to make one thing clear, that if people do manipulation in CAS, then we will take strict action and do it immediately,” he said.
The SEBI chairman said the new system provides the regulator with greater ability to identify potential manipulation compared with the earlier volume-weighted average price (VWAP)-based mechanism.
“In the CAS system, we have more capability to catch manipulation. Compared to the old VWAP system, in the CAS system, we can catch manipulation relatively easily,” Pandey said.
He stressed that the objective of CAS was to enhance transparency and ensure a fairer mechanism for determining the closing price of stocks. He also cautioned market participants against attempting to misuse the system or create doubts about its effectiveness.
“CAS is for transparency. But if someone thinks that we will manipulate the CAS to defame it, then they are mistaken,” he said.
The closing auction mechanism was introduced earlier this month as a separate 20-minute session during which exchanges collect buy and sell orders and determine a stock’s closing price at the level where the maximum volume can be executed.
The system replaced the earlier method of determining the closing price based on the average price of trades during the final 30 minutes of regular market hours.
The new mechanism is aimed at making the closing price discovery process fairer and more transparent while also improving execution efficiency, particularly for large orders.
(IANS)
