India markets regulator to partly reverse derivative settlement rules after pushback, sources say

Business Recorder reported, citing two people with direct knowledge of the matter, that India's markets regulator will partly reverse its plan to overhaul how closing prices are set for key stocks and the futures and options tied to them. The Securities and Exchange Board of India introduced a closing auction session last month, a brief session held at the close that fixes each stock's closing price. The mechanism mirrors practice in markets such as the US and Hong Kong, yet it triggered large price moves in derivatives around expiry dates, which led to a review.

SEBI said in a post on X that it had received 20,000 suggestions on its consultation paper issued last month. According to the sources, the regulator is likely to set aside the closing auction for derivatives settlement for at least one year. Instead, the volume-weighted average over the final 30 minutes of trading would determine derivative prices, while shares that trade less actively in the cash market would still use a closing auction to set their end-of-day price. The changes are expected to take effect before this month closes, and SEBI's spokesperson has not yet responded to queries on the matter.