India’s markets watchdog, SEBI, reports no evidence of manipulation in the phased rollout of the new closing auction mechanism designed to improve price discovery and market stability, as market participants continue to adapt to the changes.
India’s markets watchdog has said it has seen no evidence of manipulation in the new Closing Auction Session, the stock-market mechanism designed to determine end-of-day prices more cleanly and in line with systems used in other major economies. Speaking in Mumbai on August 12, Securities and Exchange Board of India chairman Tuhin Kanta Pandey said the regulator was still studying trading patterns and taking feedback from market participants, but had not found anything that pointed to abuse so far.
SEBI introduced the auction-based close in a phased rollout beginning August 3, replacing the earlier method that relied on a volume-weighted average price from the final 30 minutes of trading. The move was meant to improve price discovery, reduce the scope for last-minute distortions and bring Indian markets closer to practices already used in places such as Japan, Hong Kong, the US, Germany and Australia, according to earlier reporting by Moneycontrol, Livemint and Business Standard.
Pandey said the main issue so far was not transparency but adaptation. Market participants need time to become familiar with the new process, while brokers and trading systems built around the old closing method are also having to adjust. He said the discrepancies seen in the first few sessions, including on August 3, had eased in later trading days for both the Sensex and Nifty. Several brokers have already started showing indicative prices on their platforms, with more expected to follow.
The change is particularly important for index funds, passive investments and mutual fund net asset value calculations, where a stable closing reference matters, SEBI has argued. The regulator is continuing to consult investors, brokers and other stakeholders before deciding whether any refinements are needed. In January, it said the Closing Auction Session would initially apply only to cash-market shares with derivative contracts, with related changes to the pre-open auction framework due from September 7.
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