Sebi to quickly move ahead with proposals

Sebi chairman Tuhin Kanta Pandey on Saturday said that the market regulator would soon move ahead with its proposed changes to the Closing Auction Session (CAS) mechanism after receiving more than 3,500 comments on its consultation paper.

The regulator had invited views on changes to the CAS, market timings and the settlement methodology for derivative contracts. October 3 is the deadline for submitting comments.

Pandey said that Sebi would quickly go through the responses and proceed with the proposals, indicating that the consultation process would not require an extended period of analysis.

"Today is the last date, and we will actually quickly look at all these comments and go ahead, because I think our proposals are quite clear," Pandey said at an event organised by CPAI (Commodity & Capital Market Participants Association of India).

Asked specifically about the timeline for a circular, Pandey said, "Yes, it will be".

The CAS review was proposed by Sebi in September, along with changes to the methodology for calculating settlement prices of index and stock derivatives on expiry days. The review followed the introduction of the CAS in the equity cash segment and concerns over its impact on settlement prices in derivatives.

Under the CAS, closing prices are determined through an auction process. Sebi has said its consultation was aimed at addressing specific issues and sought views from market participants on different ways of resolving them. Pandey said the consultation was designed around a defined problem, while giving market participants the opportunity to put forward alternative approaches.

Beyond the CAS review, Pandey also spoke about the development of the corporate bond derivatives market. He said its growth would depend on regulatory enablement, technical infrastructure and participation from the market.

Sebi, he said, was seeking to encourage exchange-traded systems in the bond market. Among the steps already taken are an electronic bidding platform for primary issuances, regulation of online bond platform providers and strengthening of the request-for-quote mechanism for secondary-market transactions.

"Bond indices and derivatives will be, I would think, a major milestone going forward," Pandey said.

On foreign portfolio investor (FPI) flows, Pandey said the regulator's focus was on making onboarding and access to Indian markets easier. Investment decisions, however, ultimately depend on the returns and opportunities available across countries, he said.

Sebi is working with the Reserve Bank of India (RBI) on measures to further ease access for FPIs. The regulator has also taken steps such as allowing FPIs to participate in non-agricultural commodity derivatives. Pandey said FPI holdings could increase or decline depending on investment opportunities in different markets.

"All we can do at the regulatory stage is to listen to what the FPIs have to say, ease their onboarding and access," he said.