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BSE Shares Fall as New Closing Auction Session Draws Scrutiny
BSE runs a marketplace where people buy and sell shares.
Its stock price fell on Wednesday.
One reason being examined is a new system called the Closing Auction Session, or CAS.
CAS helps decide the official price of a stock at the end of the trading day.
The system began on August 3 and replaced the old method of using average prices from the final 30 minutes.
BSE said fewer types of traders are participating in the new auction.
Trading during CAS has been very small compared with the whole day and the previous system.
Regulators introduced CAS to make closing prices more transparent and similar to systems used in other markets.
Even after the recent declines, BSE shares have risen strongly over several longer periods.
BSE shares fell as much as 3% on Wednesday, reaching an intraday low of ₹3,131.50.
The exchange said its Closing Auction Session has reduced participation from high-frequency traders, proprietary accounts and retail investors.
Introduced on August 3, the CAS replaced the previous method of averaging trades from the final 30 minutes.
CAS trades accounted for less than 1% of daily cash-market turnover and under one-third of activity under the earlier system.
BSE shares are down 5.49% in a week and 14% in a month, but remain up 19.60% year to date and 43.24% over one year.
- Who
- BSE and investors and traders participating in its market.
- What
- BSE shares fell amid concerns about low participation and trading activity in the new Closing Auction Session.
- Where
- On the BSE share market in India.
- When
- The decline occurred on Wednesday, with the article citing September 2; CAS was introduced on August 3.
- Why
- The exchange acknowledged that CAS has reduced participation from high-frequency traders, proprietary accounts and retail investors, while the session has also seen low liquidity.
CAS Concerns
CAS Rationale
Trading participation
CAS Concerns
The exchange said participation from high-frequency traders, proprietary accounts and retail traders has declined, and liquidity in the auction remains low.
CAS Rationale
CAS is intended to provide a more transparent and fair process for determining official closing prices.
Market impact
CAS Concerns
The new session has been associated with notable price swings and divergences in benchmark indices, while its trading volume remains below the previous method.
CAS Rationale
Regulators introduced CAS to align Indian markets with practices already used in China, Taiwan, Hong Kong and South Korea.
Key facts
- Opening price
- ₹3,222.60 on Wednesday, compared with a previous close of ₹3,242.
- Intraday low
- ₹3,131.50 on September 2.
- CAS launch
- Introduced on August 3.
- CAS turnover
- Less than 1% of total daily cash-market turnover.
- Recent performance
- Down 5.49% in one week and 14% in one month.
- Longer-term performance
- Up 19.60% year to date, 43.24% in one year, 737% in three years and 2,291% in five years.
Quotes
BSE
The stock exchange, quoted by ZEE Business regarding participation in the Closing Auction Session.
“CAS has led to lower participations from HFT, proprietary accounts, retail traders. CAS participation needs to pick up.”
livemint.com
Sources
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