Sebi receives 20,000 comments on proposed CAS changes; framework to follow soon

The Securities and Exchange Board of India (Sebi) has received 20,000 comments on its consultation paper proposing changes to the Closing Auction Session (CAS), market timings and settlement methodologies for derivative contracts, correcting earlier reports that put the number at around 3,500.

Sebi said the correct number of comments received stood at 20,000 as of 7 pm on October 3, the final day for submissions.
The regulator had sought public feedback on its proposals in September, including changes to the CAS mechanism and the methodology for determining settlement prices of index and stock derivatives on expiry days.

Sebi Chairman Tuhin Kanta Pandey had earlier said the regulator would quickly examine the responses and proceed with the proposed framework.

“Today is the last date, and we will actually quickly look at all these comments and go ahead, because I think our proposals are quite clear,” Pandey said at an event organised by the Commodity & Capital Market Participants Association of India (CPAI).

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The consultation relates to the review of certain aspects of the Closing Auction Session, market timings and settlement methodologies for derivative contracts. Sebi's review follows the introduction of the CAS in the equity cash segment and concerns around its potential impact on settlement prices of derivatives on expiry days.

The CAS is designed to determine closing prices through an auction process. Sebi has said its review is intended to address specific issues identified with the mechanism while seeking views from market participants on possible solutions.

The significantly higher-than-reported response underscores the level of participation in the consultation process. Sebi is now expected to examine the submissions before finalising the framework.

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Focus on corporate bond derivatives

Separately, Pandey said the development of the corporate bond derivatives market would require regulatory support, technical infrastructure and greater market participation.

He said Sebi was seeking to promote exchange-traded systems in the bond market and had already introduced measures including an electronic bidding platform for primary issuances, regulation of online bond platform providers and a strengthened request-for-quote mechanism for secondary-market transactions.

“Bond indices and derivatives will be, I would think, a major milestone going forward,” Pandey said.

Sebi, RBI working on FPI access

On foreign portfolio investor (FPI) flows, Pandey said Sebi's role was to facilitate easier onboarding and access to Indian markets, while investment decisions ultimately depend on returns and opportunities available across countries.

He said Sebi was working with the Reserve Bank of India (RBI) on measures to further ease FPI access. The regulator has already taken steps such as allowing FPIs to access non-agricultural commodity derivatives.

Pandey said FPI holdings could rise or fall depending on investment opportunities across markets, adding that Sebi's focus was on listening to investors and easing their onboarding and access to Indian markets.

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