Chairman Tuhin Kanta Pandey stated that the market regulator Sebi will soon publish the framework concerning changes in the Closed Auction Session (CAS) mechanism, market timeframes, and derivative contract settlements, after receiving over 3500 responses to his consultation paper.
The Securities and Exchange Board of India (Sebi) sought public comments regarding the proposal to revise certain aspects of CAS, as well as the calculation methodology for derivative contracts. The deadline for submitting remarks was set for October 3.
When asked about the timeline for releasing the final CAS framework or circular, Pandey said that the regulator would promptly study the received responses and continue the process. He noted that since the proposals in the consultation paper were clearly formulated, compiling and analyzing the responses would not take much time.
Sebi proposed changes to the CAS structure and the methodology for determining settlement prices for index and commodity derivatives on expiration days in September. This review followed the introduction of CAS in the cash equity segment and concerns about its impact on derivative settlement prices.
CAS is designed to determine closing prices through an auction process. Sebi emphasized that the goal of the review is to address specific issues while gathering opinions on various possible ways to resolve them.
Development of the Corporate Bond Market
Speaking separately about the development of the corporate bond derivatives market, Pandey stressed that regulatory support, technical infrastructure, and market participant involvement are crucial for the growth of this segment. He added that Sebi aims to promote exchange systems in the bond market and has already taken steps such as introducing an electronic trading platform for primary issuances, regulating online platform providers for bonds, and strengthening the quote request mechanism for secondary market trades.
Pandey believes that 'bond indices and derivatives will be a major milestone in the future.'
Foreign Portfolio Investor Flows
Regarding Foreign Portfolio Investor (FPI) flows, Pandey explained that Sebi's task is to facilitate the registration process and access to Indian markets, while investment decisions ultimately depend on the returns and opportunities available in different countries. He reported that Sebi is collaborating with the Reserve Bank of India (RBI) on measures aimed at further simplifying access for FPIs. The regulator has already taken several measures, including allowing FPIs access to non-agricultural commodity derivatives.
Pandey concluded that FPI assets may grow or decline depending on investment opportunities in the markets. He emphasized: 'All we can do at the regulatory level is listen to what FPIs say and facilitate their registration and access.'