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Informist, Thursday, Aug. 6, 2026

 

MUMBAI - Even as the closing auction mechanism for equity cash segment, launched Monday, has created ripples of uncertainty and confusion among investors and traders, Securities and Exchange Board of India Chairman Tuhin Kanta Pandey said in his statement in the regulator's annual report for the financial year 2025-26 (Apr-Mar), released Thursday, that the introduction of the mechanism "ensures price discovery in closing prices, minimizing volatility and greater execution during market close".

 

The closing auction mechanism was launched by the stock exchanges Monday, following SEBI's circular in January announcing the contours of the mechanism and giving exchanges about seven months to develop the systems required to implement it. But in the first four days since the mechanism went live for stocks for which equity derivatives contracts are permitted, the 15-minute closing auction mechanism from 1515 IST to 1530 IST has led to investor complaints on lack of efficient discovery of spot prices and the detrimental impact that is having on index and stock derivatives which depend on the underlying prices.

 

The SEBI chairman also outlined several measures initiated or introduced by the market regulator in FY26. On primary markets, he said the restructuring of the minimum public offer framework, which calibrated public float requirements to issue size, would help capital formation in the country. By extending the timeline for the largest issuers to achieve 25% minimum public shareholding to 10 years, "we have ensured that large-scale enterprises can access public capital, without facing challenges of regular dilution post listing", he said.

 

On secondary markets, the SEBI chairman put a lot of emphasis on measures taken by the market regulator in the digital space. Apart from continuing focus on market infrastructure entities such as stock exchanges, clearing corporations, and depositories, SEBI is keenly focusing on safeguarding investors' trust in the digital era. "The quality of market data, the integrity of data systems, and the governance frameworks that regulate data use now matter as much to market functioning and investor protection as physical infrastructure," he said in his statement in the annual report. "SEBI has responded to this shift by investing in technology and data analytics as core supervisory tools, ensuring that while the market scales, the safety net for the investor scales even faster."

 

The SEBI chief gave examples of steps in this regard in FY26 such as actionable verification of financial counterparties through validated UPI handles and a "SEBI Check" facility through which investors can confirm on a real-time basis whether a payment by them is being directed to a genuine SEBI-registered intermediary.

 

He also pointed to SEBI's artificial intelligence-enabled platform, which reviews advertisements by individuals or entities on stock market-related products and services. The platform's "tools allow us to actively identify unauthorised digital activity and finfluencers (financial influencers) who may mislead investors through unverified claims," Pandey said. In FY26, SEBI also continued "harnessing technology to strengthen market oversight and uses advance analytics, AI/ML (artificial intelligence/machine learning) models to detect complex market manipulation patterns and network-based frauds, he said.

 

Laying out SEBI's vision for FY27 and ahead, the chairman said a key aim is to deepen the cash market "to spur capital formation". The regulator will soon initiate a revamp of the securities lending and borrowing scheme "to improve price discovery and facilitate interlinkage between the cash and derivatives segments", he said. SEBI will also continue working on its agenda to strengthen the agricultural and non-agricultural commodity derivatives markets, he said.  End

 

Reported by Rajesh Gajra

Edited by Rajeev Pai

 

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