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The regulator is satisfied with the design and intent of the new market closing mechanism, even as brokers have raised concerns over the framework's impact on retail investors, sources said.
By Yash Jain August 5, 2026, 10:44:22 AM IST (Published)
2 Min Read
The Securities and Exchange Board of India (SEBI) has no plans to review, modify or withdraw the newly introduced Closing Auction Session (CAS) framework and has instead urged brokers to encourage greater retail participation in the mechanism, sources told CNBC-TV18 exclusively.
According to people familiar with the matter, the market regulator believes there are no issues with the framework's design, intent or implementation, despite concerns raised by some market participants following its rollout earlier this week.
The sources said SEBI has asked brokers to take steps to improve awareness and participation among retail investors, rather than seeking changes to the framework.
The Closing Auction Session came into effect on Monday, August 3, for stocks with listed futures and options (F&O) contracts, replacing the earlier system where the closing price was determined using the volume-weighted average price (VWAP) of trades executed between 3 PM and 3:30 PM.
Under the revised mechanism, regular trading in eligible F&O stocks ends at 3:15 PM, followed by a closing auction session for the next 20 minutes, in which buy and sell orders are matched to discover a single closing price. The new framework is aimed at improving price discovery, enhancing transparency and concentrating end-of-day liquidity into one auction.
The first day of implementation saw the Nifty close near the day's high after a sharp move during the auction session, while the Nifty Midcap index also witnessed a late surge to end at a record high.
Market participants, however, have flagged concerns around the operational changes, particularly for retail investors accustomed to continuous trading until 3:30 pm. Under the new process, intraday positions are auto-squared off from 3:05 pm, while eligible orders are matched through the auction after regular trading ends.
Despite these concerns, SEBI does not see a need to revisit the framework at this stage and remains focused on increasing participation in the auction mechanism, sources said.
The Nifty saw a recovery of 150 points from the lows during Tuesday's session on the final tick, while the Sensex saw a move of over 100 points as well. Similar action was witnessed on the Nifty Bank index.
HomeMarket NewsExclusive | SEBI to stay course on CAS framework, urges brokers to boost retail participation
