Mumbai, August 29, 2026 (Yes Punjab News)
Former BJP MP Kirit Somaiya has urged the Securities and Exchange Board of India (SEBI) to temporarily suspend and redesign the newly introduced Closing Auction Session (CAS) mechanism after the Sensex recorded a sharp fall and recovery during the final minutes of trading on August 27.
In a letter to SEBI Chairman Tuhin Kanta Pandey, Somaiya drew attention to market movements between 3.20 p.m. and 3.30 p.m., when the Sensex reportedly plunged by more than 2,200 points before recovering nearly 2,000 points.
The episode occurred during the first monthly derivatives expiry since CAS was introduced, raising concerns about liquidity and price discovery. Somaiya questioned whether the unusual volatility exposed weaknesses in the new framework and urged SEBI to examine the matter seriously.
He said that if a systemic weakness contributed to the movement, those responsible for designing the framework should explain what went wrong. He also questioned whether the market movement could have been deliberate or linked to an attempt to undermine the implementation of CAS, calling for an inquiry followed by appropriate action based on its findings.
Somaiya separately flagged liquidity concerns after 3.15 p.m., citing an observation from a market participant that insufficient market depth during this period could amplify volatility when investors attempt to execute trades.
In a proposal accompanying his letter, Somaiya called for CAS to be suspended temporarily and subsequently reintroduced after a redesign based on practical considerations.
Under the current arrangement, continuous trading in CAS securities ends at 3.15 p.m., followed by a separate closing auction, while equity derivatives continue trading until 3.40 p.m. Somaiya argued that the framework removes continuous trading liquidity at a crucial time and then relies on an auction to establish the closing price.
He also raised concerns about the division of closing liquidity between the NSE and BSE, noting that the same security can undergo separate closing auctions on the two exchanges, with different order books, imbalances and potentially different equilibrium prices.
FOLLOW NOW
