4 days ago
Sebi Keeps CAS Unchanged, Nears Approval of NSE IPO
India’s market regulator has decided to keep a new trading rule called CAS unchanged for now.
CAS collects buying and selling orders and matches them in an auction near the end of the trading day.
The regulator introduced it to make markets more transparent and harder to manipulate.
Some market participants have raised concerns about how the new system works.
The regulator says it can detect manipulation better under CAS than under the older system.
Sebi is also close to deciding whether to approve the National Stock Exchange’s plan to sell shares to the public.
The regulator has not yet received a proposal about letting NSE shares trade on NSE’s own platform.
Its chairman also said regulators must prepare for risks that can spread across many financial institutions, including risks created by technology and AI.
Sebi Chairman Tuhin Kanta Pandey said no changes are currently planned for the closing auction session.
Pandey said participation in CAS is expected to increase as brokers enable it in their applications.
He said Sebi is close to approving the National Stock Exchange’s Draft Red Herring Prospectus for its IPO.
Pandey said Sebi has greater ability to detect manipulation under CAS than under the earlier VWAP system.
He urged markets to anticipate network-wide risks involving interconnected institutions, technology failures, liquidity shocks and artificial intelligence.
- Who
- Sebi Chairman Tuhin Kanta Pandey and the Securities and Exchange Board of India.
- What
- Sebi will not currently change the closing auction session and is close to approving the National Stock Exchange’s IPO prospectus.
- Where
- Mumbai.
- When
- The statements were made at the 30th Anniversary Celebration of NSE Clearing; CAS was introduced on August 3, and Pandey issued an earlier warning on August 19.
- Why
- CAS was introduced to improve transparency and prevent market manipulation, while the regulator is reviewing the NSE IPO and broader market risks.
Market Concerns
Regulator’s Position
Closing auction session
Market Concerns
Market participants have expressed wide-ranging concerns about CAS and experienced what the Sebi chairman previously called teething troubles.
Regulator’s Position
Pandey said no changes are currently needed, participation should grow, and Sebi can detect manipulation more effectively under CAS than under the previous VWAP system.
Artificial intelligence
Market Concerns
AI may create additional risks through opaque models, data problems, governance weaknesses and operational failures.
Regulator’s Position
AI can also improve market surveillance, risk analytics and decision-making.
Risk management
Market Concerns
Assessing individual institutions may miss risks created by common exposures, technology providers and sudden liquidity shocks.
Regulator’s Position
Pandey called for a broader system that anticipates network-level and system-wide risks instead of only measuring risks at the entity level.
Key facts
- Regulator
- Securities and Exchange Board of India, led by Chairman Tuhin Kanta Pandey.
- CAS status
- No changes are currently planned for the closing auction session.
- CAS launch
- The closing auction session was introduced on August 3.
- NSE IPO
- Sebi is very close to approving the National Stock Exchange’s Draft Red Herring Prospectus.
- Self-listing proposal
- Pandey said no proposal has yet been received from NSE to allow its shares to trade on its own platform.
- Risk priorities
- The regulator highlighted interconnected institutions, technology failures, liquidity shocks and AI-related risks.
Quotes
Tuhin Kanta Pandey
Chairman of the Securities and Exchange Board of India
“Therefore, risk management must evolve. We must move from measuring risk to anticipating risk. We must move from entity-level risk management to network-level and system-wide risk management”
thehansindia.com
“We are not seeing any changes right now to CAS, and the system is running as it is. Participation will increase and everyone, brokers, will enable it in their apps”
thehansindia.com
Sources
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