SEBI May Rethink Derivatives Settlement Rules After Market Pushback | What Could Change?

Could SEBI reconsider its derivatives settlement rules following feedback from market participants? A Reuters report suggests the regulator may pause the use of the closing auction session for derivatives settlement for at least a year. Instead, settlement prices could be calculated using the volume-weighted average price (VWAP) of the final 30 minutes of trading. The proposed rethink follows concerns over sharp price swings on expiry days, declining trading volumes and reduced retail participation. Market expert Ramesh explains why transparency and liquidity are crucial for efficient price discovery and how the current methodology may have affected market participation. SEBI has reportedly received around 20,000 suggestions on proposed rule changes, with the revised framework potentially coming by the end of October.