SEBI review of CAS settlement rules lifts brokerage, BSE shares; consultation paper due next week

Brokerage and BSE shares rise after SEBI signals review of CAS-linked settlement prices

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Shares of brokerage firms and BSE gained on 4 September after the Securities and Exchange Board of India (SEBI) said it may propose changes to the methodology used to determine settlement prices of derivative contracts under the Closing Auction Session (CAS) framework.

Angel One shares rose nearly 8% during intraday trade, while BSE climbed about 5%. Shares of Billionbrains Garage Ventures, which operates Groww, gained nearly 3%. Motilal Oswal Financial Services also rose about 3%, while Nuvama Wealth Management added more than 1%, according to Mint market data.

The move followed a SEBI statement issued on 3 September saying it would release a consultation paper within about a week after reviewing feedback received during the first month of CAS implementation.

What SEBI said

SEBI said it had reviewed the initial experience of CAS and feedback from stakeholders, including stock exchanges, brokers, software vendors, mutual funds, industry associations and foreign portfolio investors, according to the regulator's press release.

The regulator said one of the key concerns raised by market participants relates to the way settlement prices of derivative contracts on expiry are determined using the closing price discovered through CAS.

"Having considered the experience of the initial period of CAS implementation and the feedback received from various stakeholders, SEBI may be proposing certain changes in the methodology for determination of settlement prices of derivative contracts," the regulator said. A consultation paper is expected within about a week, according to SEBI.

CAS framework

SEBI introduced the Closing Auction Session in the equity cash segment from 3 August 2026 for determining the closing price of securities, according to the regulator.

Under the framework, buy and sell orders are matched during the closing auction window to discover a final closing price. The closing price determined through CAS is also used as the settlement price reference for derivative contracts expiring on that day.

The regulator said CAS was introduced after multiple rounds of stakeholder consultation and policy discussions, including public consultations held in December 2024 and August 2025.

Market concerns

Concerns over the new framework have grown since its rollout, with market participants highlighting sharp price movements during the auction session and the impact on derivatives settlements.

On 3 September, the BSE Sensex dropped by more than 2,000 points within minutes during the closing auction before recovering part of the fall and ending the session 417 points lower at 76,152.86, according to exchange data cited by Mint and other market reports.

Several market participants have argued that using an auction-discovered closing price for derivatives settlement can create uncertainty, especially when the cash market is no longer trading continuously while derivatives continue to trade.

SEBI said it has been monitoring the functioning of CAS since its launch and engaging with stakeholders to address operational issues that emerged during the initial phase of implementation.

What happens next

SEBI is expected to publish a consultation paper outlining proposed changes to the settlement-price methodology within about a week.

The paper will seek stakeholder feedback before any final decision is taken. Until then, the existing CAS framework remains in place for determining closing prices and derivatives settlement values, according to the regulator.