India's markets regulator, the Securities and Exchange Board of India (SEBI), is planning to propose changes to the settlement pricing of equity derivatives. This move comes after market participants provided feedback that a newly introduced closing-auction system triggered sharp price swings.
SEBI is expected to release a consultation paper on this matter within a week. The review follows the first month of the auction system's implementation, which began on August 3. This system is used to establish end-of-day prices for over 200 stocks, which are subsequently used for settling futures and options contracts.
The regulator's re-evaluation aims to address concerns about market volatility and ensure more stable and predictable settlement prices for derivatives, particularly on expiry days.
