2 weeks ago
Retail investors worry about SEBI's new Closing Auction Session
There is a group in India that watches over the stock market, called SEBI.
It decides the price at which stocks finish trading each day.
Before, the closing price was figured out using an average of all the prices during the day.
Now, SEBI has started a new way called the Closing Auction Session.
In this new way, the closing price is set during a special auction at the end of the day.
SEBI says this new method makes it harder for people to cheat and change the closing price.
It also says the new method helps find a fairer price.
But some regular people who invest their money are worried.
They wonder why SEBI changed something that seemed to work fine.
A news company called Mint asked SEBI about these worries.
SEBI had not answered yet when the article was written.
SEBI introduced the Closing Auction Session (CAS) on 3 August to determine India's stock market closing price.
The new mechanism replaces the old volume-weighted average price (VWAP) method.
SEBI's stated goals are to make the closing price harder to manipulate and improve price discovery.
Retail investors are questioning whether SEBI broke a working system in an attempt to fix it.
Mint sought SEBI's response to the concerns, but the regulator had not replied by publication time.
- Who
- SEBI (Securities and Exchange Board of India) and retail investors in India's stock market
- What
- Introduction of the Closing Auction Session (CAS) to replace the volume-weighted average price (VWAP) method for determining closing prices
- Where
- India's stock market
- When
- Introduced on 3 August, with concerns raised about a week into the rollout
- Why
- To make the closing price harder to manipulate and to improve price discovery
SEBI's rationale
Retail investors' concerns
Need for the Closing Auction Session
SEBI's rationale
SEBI introduced CAS to make the closing price harder to manipulate and to improve price discovery.
Retail investors' concerns
Retail investors question whether SEBI broke a perfectly working system in an attempt to fix it.
Key facts
- Regulator
- Securities and Exchange Board of India (SEBI)
- New mechanism
- Closing Auction Session (CAS)
- Introduction date
- 3 August
- Replaced method
- Volume-weighted average price (VWAP)
- Stated objectives
- Harder to manipulate closing price; better price discovery
- Retail investor concern
- Whether SEBI broke a working system
- Media inquiry
- Mint sought SEBI's response; no reply by publication time
Sources
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