Shares of BSE, Groww (Billionbrains Garage Ventures) and Angel One rallied as much as 8% after capital markets regulator Sebi issued a circular on the Closing Auction Session (CAS).

Sebi plans to review the methodology for setting derivative settlement prices on expiry, after market participants raised concerns over the new Closing Auction Session. The regulator said it will issue a consultation paper on the matter next week.

The Closing Auction Session is a call auction mechanism used to determine the closing price of stocks in the cash segment on which derivative contracts are available. Because these closing prices also serve as the basis for settling derivative contracts, the mechanism has drawn attention from traders and market intermediaries concerned about price volatility around expiry sessions.

The consultation paper is expected to invite feedback from market participants on how expiry-day settlement prices should be determined under the new framework.

The move comes against the backdrop of India's derivatives market undergoing a series of regulatory changes, including earlier Sebi measures that raised contract sizes and restricted weekly expiries to one benchmark index per exchange. Any change in how expiry-day settlement prices are set carries direct relevance for brokerages and exchanges, since volumes and revenue in the F&O segment are closely tied to trading activity around expiry sessions.

The stocks of brokerages and the exchange operator — including Angel One, Choice International, JM Financial, IIFL Capital Services and Nuvama Wealth Management — were in focus following the regulator's announcement.

Market participants will be watching the consultation paper's specific proposals on the settlement-price methodology and the feedback window Sebi provides before final norms are notified.

Source: Economic Times Markets