SEBI Chairman Tuhin Kanta Pandey assures the continuation of the new closing auction session as regulator prepares a consultation paper, amid growing participation and recent innovations like tokenised bonds and DEMAT 2.0 framework to modernise India’s financial markets.
Tuhin Kanta Pandey has moved to calm concerns over the new Closing Auction Session, saying the mechanism will stay in place even as the regulator prepares a consultation paper on how it is working in practice. Speaking to Zee Business at the Global Fintech Fest in Mumbai, the Securities and Exchange Board of India chairman said the paper was imminent, describing its release as “basically a matter of a few hours”. He also said the closing auction remains part of the market structure, even after a stretch of late-session volatility has put the system under scrutiny.
The issue has become more visible on derivatives expiry days, when benchmark indices have swung sharply in the final minutes of trade. On Thursday, the Sensex and Nifty both recovered late losses and ended higher after spending much of the session under pressure, with market participants linking the reversal to activity in the closing auction window. Traders and fund managers have been asking whether settlement prices for derivatives should be separated from the auction period, given the concentration of orders and the thin liquidity that can prevail near the close.
In earlier comments reported by Business Standard and other outlets, Pandey said SEBI had not seen any manipulation in the new auction system and signalled that the regulator was open to adjustments once it had more market feedback. He said participation was still building, particularly among mutual funds, and noted that their share in the session had risen from roughly 5% to 6% to about 20% to 25%. The auction was introduced to produce a more transparent closing price and to improve execution for large orders and passive funds that need to track benchmarks closely.
Pandey was also speaking as SEBI and the Reserve Bank of India rolled out the country’s first tokenised corporate bond pilot, alongside a new DEMAT 2.0 framework. The pilot uses distributed ledger technology to record ownership and transfers, while the RBI’s central bank digital currency is used for settlement so that securities and cash move at the same time. According to the regulator, the aim is to modernise post-trade infrastructure without changing the underlying rules for investors, who will continue to use existing demat accounts and market interfaces. SEBI said the project was launched about three months ahead of schedule, a sign that the regulator wants to accelerate wider market reform.
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