Shares of capital market shares had been buzzing within the commerce on Friday, September 4, as SEBI plans to evaluate the settlement worth methodology for by-product contracts after the closing public sale session (CAS) rollout.
A month after rolling out the CAS, the market regulator SEBI is planning to evaluate the by-product settlement methodology at expiry amid considerations over utilizing the CAS-determined closing worth because the settlement foundation.
SEBI stated on Thursday that it could revise the prevailing methodology and is prone to launch a session paper on the proposed framework inside a few week
“Among the many points raised, a big space of suggestions pertains to the willpower of settlement costs of by-product contracts on expiry primarily based on the closing worth decided by way of CAS,” the regulator stated in an announcement.
The event comes shortly after SEBI launched CAS within the fairness money section from August 3 to find out the closing worth of securities.
Capital market shares soar
Shares of BSE Ltd jumped as a lot as 5% to ₹3,474 apiece on the NSE, whereas Angel One rallied as much as 7.8% to hit a excessive of ₹308.35. Billionbrains Storage Ventures (Groww) shares had been up 1.5% to ₹193.10 apiece on the NSE, whereas Nuvama Wealth Administration gained as a lot as 1.28% to ₹1,862.80 on the NSE.
CAS introduction: What it’s worthwhile to know
CAS is a brand new mechanism utilized by inventory exchanges to resolve the official closing worth of a inventory or index on the finish of the buying and selling day.
In easy phrases, as a substitute of taking the worth at which a inventory was final traded, the change conducts a brief public sale close to market shut. Throughout this era, purchase and promote orders are collected and matched to reach at a single worth at which the utmost variety of shares could be traded. That worth turns into the official closing worth.
Beneath the present framework, the closing worth arrived at by way of CAS additionally serves as the idea for figuring out settlement costs of by-product contracts on expiry.
Having reviewed the primary month of CAS operations and regarded suggestions from market members, SEBI stated it “could suggest modifications to the methodology for figuring out settlement costs of by-product contracts”.
The proposed modifications can be detailed within the session paper, which is predicted to be issued “in a few week”, SEBI stated.
Since its implementation, the regulator has been carefully participating with inventory exchanges, brokers, proprietary merchants, software program distributors, mutual funds, trade associations and FPIs to make sure easy implementation of CAS and deal with operational points rising throughout its preliminary adoption, it added.
SEBI additionally stated it has monitored the functioning of CAS and its affect available on the market through the first month of implementation.
Suggestions was acquired from market members and different stakeholders by way of a number of channels, together with social media and different platforms, the regulator stated.
CAS was launched after in depth stakeholder consultations and coverage deliberations, together with two rounds of public session held in December 2024 and August 2025, in addition to discussions with advisory committees and varied stakeholders.
Final month, SEBI issued an interim order impounding a complete of ₹3.68 crore in alleged wrongful beneficial properties from two entities accused of worth manipulation through the CAS on the BSE Sensex weekly choices expiry day on August 13.
Key considerations
CAS itself was launched to make the closing worth extra clear and environment friendly. The issue is that when that public sale worth can also be used to settle derivatives, even a brief worth distortion close to the shut can have a a lot greater affect on merchants’ earnings and losses. That’s the reason SEBI is now taking a look at altering the by-product settlement methodology, relatively than essentially scrapping CAS.
The primary concern with CAS is that the closing worth of shares—and subsequently the index—can transfer sharply in a really quick window as a result of liquidity through the public sale is comparatively skinny. This turns into notably essential on F&O expiry days as a result of the CAS-determined closing worth is used to settle derivatives.
The opposite concern is uncertainty and decrease participation.
Since CAS changed the sooner VWAP-based closing worth, merchants—notably choices merchants—have been frightened that a big order in a comparatively illiquid public sale might have an outsized affect on the closing worth.
Accessible stories and evaluation notice that this makes it more durable to hedge positions and will increase the danger of sudden modifications within the worth of expiring derivatives.
Fairness possibility contracts traded fell 30% month-on-month in August, whereas index-options premium turnover declined 20%, with analysts linking a part of the weak spot to CAS-related uncertainty.
With inputs from PTI
Disclaimer: This text is written purely for informational functions and shouldn’t be thought-about funding recommendation from Upstox. Securities talked about are illustrative and never suggestions. Please seek the advice of a monetary adviser earlier than making any funding choices.
