Sebi Implements New Rules Aimed at Reducing Volatility and Manipulation on Expiry Day

SEBI Proposes Changes to Market Regulations Following Industry Feedback

The Securities and Exchange Board of India (SEBI) has announced a series of proposed revisions aimed at improving market stability and reducing manipulation, particularly concerning expiry-day trading. Experts believe that these new regulations could help mitigate price volatility and safeguard investor interests.

The proposals came after extensive feedback from industry stakeholders who expressed concerns about the current trading systems effectiveness. Key changes include adjustments to the Calculation of Average Settlement (CAS) methodology. This will impact the timing of settlements and define how derivative prices are determined during expiry days.

The adjustments are part of SEBIs ongoing effort to enhance the integrity of the financial markets. Stakeholders have been seeking changes that would lead to more transparent practices in trading and settlement processes, especially in high-stakes scenarios often associated with expiry days.

In addition to proposed timing changes for CAS, SEBI is looking to modify how derivatives settlement prices are calculated, which could lead to a more standardized approach across the industry.

SEBIs proposals come at a time when market dynamics are increasingly influenced by algorithmic trading and high-frequency trading strategies. As these technologies evolve, maintaining regulatory oversight and market fairness becomes critical.

Further discussions are expected as SEBI reviews feedback from market participants and industry experts, aiming to implement changes that foster a safer trading environment while ensuring regulatory compliance and industry standards are upheld.

Any revisions will undergo a formal consultation process, where stakeholders will have the opportunity to express their views before changes are finalized.