Regulator to issue new CAS guidelines in a week: SEBI Chairman

Securities and exchange board of India (Sebi) Chairman Tuhin Kanta Pandey said on Saturday that the regulator hopes to issue new guidelines on changes to closing auction session (CAS) within a week’s time. This follows the consultation paper released by Sebi last month which proposed two methods to determine settlement prices of derivative contracts on expiry days, blended VWAP (volume-weighted average price) and VWAP similar to method used before implementation of CAS.

The regulator had earlier shared that it received over 20,000 comments from market participants on the consultation and is currently examining them to issue the final guidelines.

Speaking at the BSE Broker Forum Capital Markets Confluence, Pandey emphasized the importance of deepening the cash markets and improving price discovery. “Wider participation, stronger securities borrowing and lending and efficient hedging and arbitrage can improve liquidity and market efficiency,” he added.

While discussing the shift in capital markets with advancements in technology and rising scale, Pandey stressed on the role of industry bodies like the Brokers’ Industry Standard Forum (ISF) in identifying emerging issues before they become larger problems. He also highlighted the role of brokers in increasing investor confidence in the capital markets and asked them to pay attention on everyday activities like secure onboarding, explanation of risks and grievance resolution to build trust.

Pandey further asked brokers and other capital market intermediaries to become active partners in Sebi’s investor awareness campaign ‘Project Jagrook’ by using every investor interaction for awareness.

Sharing the regulations Sebi is working on in the near term, Pandey informed that the regulator is working to resolve issues around tender offers, buybacks and offers for sale which currently remain out of the interoperability framework, with implementation targeted by end of November. Other measures include simpler digital onboarding for Persons Resident Outside India.

The regulator has received over 400 comments on consultation paper about and a circular on the same will be issued shortly, he said. Further, the regulator also plans to issue guidelines for responsible use of AI and machine learning. The guidelines will adopt a tiered approach with clear accountability, data controls, kill switches and human oversight.