3 weeks ago
Zerodha's Nithin Kamath: CAS isn't the problem, shallow markets are
At the end of every trading day, the stock market picks a final price for each stock.
In India, they recently changed how that final price is chosen using something called CAS.
After this change, stock prices started swinging around more at the end of the day, and some people blamed CAS.
A man named Nithin Kamath, who runs a big trading company called Zerodha, says CAS isn't really the problem.
He says the real problem is that India's market is 'shallow'—meaning not enough people and companies are actively buying and selling.
There are over 130 million registered investors, but only a few million trade on any normal day.
When there aren't enough traders, big buy or sell orders can move prices a lot.
He also says it's hard to borrow shares to bet against stocks, and some taxes make trading more expensive.
He thinks the fix is to make it easier and cheaper for many different kinds of traders to take part.
Until then, he says, the big price swings at the close will keep happening.
Zerodha founder Nithin Kamath says the Closing Auction Session (CAS) is not the cause of recent closing-price volatility in Indian markets.
CAS pools buy and sell orders into a single auction to discover one closing price, replacing the volume-weighted average of the final 30 minutes.
India has over 13 crore registered investors but only about 20-30 lakh active traders on a typical day, leaving markets without deep two-sided liquidity.
Kamath says hard shorting, the April 2026 STT change making futures trading more expensive, and new RBI norms limiting banks' capital-market exposure compound the problem.
He says the bigger fix is building market depth—easier shorting and securities lending, reduced cost distortions, and genuine market makers—while CAS may only need tweaks.
- Who
- Nithin Kamath, founder of Zerodha, who commented on Indian stock market volatility in a social media post on LinkedIn.
- What
- Kamath argued that the Closing Auction Session (CAS) is not the cause of sharp closing-price swings; shallow market depth is the underlying structural problem.
- Where
- India's capital markets, reflected in the Nifty's closing session.
- When
- Recent, following the implementation of CAS and the April 2026 securities transaction tax change.
- Why
- Volatility spiked after CAS was introduced, and Kamath sought to explain the deeper structural reasons behind it.
Concerns about CAS
Nithin Kamath's view
Cause of closing-price volatility
Concerns about CAS
Closing-price swings spiked since CAS was implemented, sparking concerns that CAS itself is causing the volatility.
Nithin Kamath's view
CAS is not the cause; it only makes long-standing structural limitations such as shallow two-sided liquidity more apparent.
Where to focus the fix
Concerns about CAS
Focus on tweaking how CAS itself works to calm the close.
Nithin Kamath's view
Tweaks to CAS may be needed, but the bigger fix is building market depth through easier shorting, deeper securities lending, fewer cost distortions, and genuine market makers.
Key facts
- Speaker
- Nithin Kamath, founder of Zerodha
- Platform
- LinkedIn post
- Topic
- Closing Auction Session (CAS) and closing-price volatility
- Registered investors in India
- Over 13 crore
- Active daily traders
- About 20-30 lakh
- Previous closing price method
- Volume-weighted average of the final 30 minutes
- Related regulatory changes
- April 2026 STT change; RBI norms limiting banks' capital-market exposure
- Recommended fixes
- Easier shorting and securities lending, fewer cost distortions, genuine market makers
Quotes
Nithin Kamath
Founder of Zerodha, India’s largest retail broker
“"There might be tweaks required in how CAS itself works. But the larger issue of our markets being shallow is a complicated problem to solve."”
financialexpress.com
“"CAS is not the reason for these structural limitations, but it makes them more apparent."”
financialexpress.com










