India's SEBI Seeks Public Input on Closing Auction, Derivatives Settlement Changes

India's Securities and Exchange Board of India (SEBI) on September 12 issued a consultation paper seeking public comments on changes to the closing auction session (CAS), derivatives contract settlement methods and market trading hours, according to Jiemian News. SEBI said it is studying two ways to calculate derivatives expiry settlement prices and may adopt a hybrid VWAP method that combines continuous trading and closing auction trades. It also proposed two trading-hour options: under Option A, continuous trading for CAS stocks would run until 3:30 pm, followed by the closing auction, while derivatives trading would be extended to 3:45 pm; under Option B, continuous trading for CAS stocks would end at 3:15 pm, CAS would run from 3:15 pm to 3:25 pm, and derivatives trading would end at 3:30 pm. SEBI also proposed banning limit orders that deviate by more than 1% from the reference price from being canceled during the closing auction, while still allowing price improvements and the remaining quantity of unfilled iceberg orders to enter CAS. The regulator said the proposal follows market feedback after CAS was implemented on August 3, 2026, and aims to improve the link between cash and derivatives markets and the closing price discovery mechanism. Public comments are due by October 3.