4 days ago
Kirit Somaiya Urges SEBI to Suspend and Redesign CAS
Kirit Somaiya has asked India’s market regulator, SEBI, to investigate a sudden movement in the Sensex.
On August 27, the index reportedly dropped by more than 2,200 points and then recovered about 2,000 points within minutes.
This happened near the end of trading, when a new Closing Auction Session was being used.
CAS is a process used to help determine the final price of shares.
Somaiya believes there may not have been enough buyers and sellers after continuous trading ended at 3:15 p.m.
He also questioned whether the unusual movement could have been caused deliberately.
He wants CAS paused while experts redesign it.
He is also concerned that separate auctions on NSE and BSE could produce different closing prices.
Kirit Somaiya asked SEBI to examine sharp Sensex volatility during the final minutes of trading on August 27.
The Sensex reportedly fell more than 2,200 points and recovered about 2,000 points between 3:20 p.m. and 3:30 p.m.
The movement occurred during the first monthly derivatives expiry since the Closing Auction Session was introduced.
Somaiya cited possible post-3:15 p.m. liquidity shortages and questioned whether the volatility reflected a system weakness or deliberate interference.
He proposed temporarily suspending and redesigning CAS, citing concerns over liquidity and separate closing auctions on NSE and BSE.
- Who
- Former BJP MP Kirit Somaiya, SEBI Chairman Tuhin Kanta Pandey, and the Securities and Exchange Board of India.
- What
- Somaiya urged SEBI to investigate sharp Sensex volatility and temporarily suspend and redesign the Closing Auction Session.
- Where
- The Indian stock market, involving closing-auction processes on NSE and BSE.
- When
- August 27, during the period from 3:20 p.m. to 3:30 p.m.; the episode occurred during the first monthly derivatives expiry since CAS was introduced.
- Why
- Somaiya cited concerns about possible system weaknesses, insufficient late-session liquidity, deliberate interference, and fragmented closing liquidity.
Key facts
- Market movement
- The Sensex reportedly fell by more than 2,200 points and recovered around 2,000 points.
- Time of volatility
- The sharp movement occurred between 3:20 p.m. and 3:30 p.m. on August 27.
- CAS timing
- Continuous trading in CAS securities ends at 3:15 p.m.
- Derivatives trading
- Equity derivatives continue trading until 3:40 p.m.
- Somaiya’s proposal
- Temporarily suspend CAS and reintroduce it after a practical redesign.
- Exchange concern
- Separate closing auctions on NSE and BSE may have different order books, imbalances, and equilibrium prices.
Sources
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