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Informist, Monday, Aug. 17, 2026

 

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--SEBI chief: Expect paper on securities lending, borrow mechanism soon 
--SEBI chief: New closing norms address issues in old method 
--SEBI chief: New closing norms here to stay 
--SEBI chief: Changes in new closing norms will depend on market feedback 
--SEBI chief: Talking to participants on ways to improve new closing norms 
--SEBI chief: Studying data to find manipulation in bourses new closing norms 
--SEBI chief: AI for cybersecurity must itself be secured, governed 
--SEBI chief: Vulnerability management approach outdated, needs overhaul 
--CONTEXT: Comments from SEBI Chairman Tuhin Kanta Pandey at an event 
--SEBI Chair: Cyber threats becoming more interconnected, sophisticated 

 

MUMBAI – The Securities and Exchange Board of India will continue to assess and fine-tune the recently introduced closing-price mechanism based on market feedback, but the mechanism is here to stay, Chairman Tuhin Kanta Pandey said in an event on Monday.

 

Pandey said the regulator is already engaging with market participants and analysing trading data to assess concerns around the new closing mechanism, including unusual activity on expiry days. However, he made clear that the new system, known as the Closing Auction Session, or CAS, is not under reconsideration.

 

"The CAS is here to stay, for sure," Pandey said, adding that SEBI would examine constraints and make improvements wherever necessary.

 

The comments came amid concerns among sections of the derivatives and trading community over the impact of the new closing-price methodology. Pandey said it was too early to draw conclusions from the first few weeks of the system, pointing out that participation had increased, volatility had come down and divergences between the initial and final closing prices had narrowed.

 

SEBI is studying data to determine whether any extraordinary trading activity surrounding the new mechanism points to manipulation, Pandey said. He noted that expiry days had historically seen unusual activity under the previous system as well, and warned that the regulator would take strict action if deliberate manipulation was detected.

 

Pandey said SEBI had received many suggestions from market participants and is discussing them with stakeholders before deciding on possible changes. The regulator's teams are examining the proposals and engaging with participants to determine which suggestions would actually improve the functioning of the system.

 

"Many of the suggestions are good. But the point is, apparently good or real good, we have to see," he said. He said the regulator did not want to create unnecessary problems in the market merely to achieve its objectives and would look at changes wherever they were warranted. 

 

The chairman also rejected concerns that the new closing mechanism could increase tracking error for foreign investors. He said international participants had welcomed the new closing norms because it provides a single executable price, compared with the earlier closing price that was derived from the last volume-weighted average price.

 

According to Pandey, some of the difficulties being reported stem from market participants' legacy systems and processes having been built around the previous methodology. These systems would eventually adapt to the new framework, he said. The chairman also defended the regulator's decision to proceed with the change after giving the industry considerable time to prepare. He said major changes to market microstructure can initially face resistance because participants often expect implementation to be postponed and, therefore, do not invest sufficient effort in preparing for a new system.

 

On the securities lending and borrowing mechanism, Pandey said a working group is examining reforms and that SEBI expects to move on the issue soon. "It will definitely help in CAS, because the CAS would mean more participation. SLBM (securities lending and borrowing mechanism) improves CAS participation and that has been our goal," he said.

 

Separately, Pandey warned that cyber threats facing the financial system are becoming increasingly sophisticated and interconnected, making collective resilience across financial institutions, technology providers and regulators critical. "The threats are becoming more interconnected and sophisticated," Pandey said in his keynote address at the cyber-defence symposium. He said a weakness at one institution can have consequences for vendors, technology platforms, third parties and connected institutions.

 

He said the central question for the financial sector was no longer whether an organisation was secure in isolation, but whether the wider ecosystem was resilient. Cyber resilience, he said, requires institutions to be able to anticipate, withstand, respond to, recover from and learn from attacks. Organisations should have tested incident-response and recovery plans, with clearly defined responsibilities for decision-making, system isolation, communication with regulators and restoration of critical operations.

 

Pandey said the traditional approach to vulnerability management was increasingly outdated and needed to be replaced with a continuous, dynamic and risk-based framework. "Vulnerability management, too, must become continuous. Dynamic and risk-driven rather than a periodic compliance exercise," Pandey said.

 

He called for a continuous cycle of discovering, assessing, prioritising, remediating and validating vulnerabilities. Patch management should also become more intelligent, risk-based and increasingly automated, particularly for critical vulnerabilities, with institutions required to verify that remediation has actually worked.

 

Pandey also cautioned that the growing use of artificial intelligence in cyber defence creates new risks even as it offers significant opportunities. AI, agentic systems, automation and advanced analytics can help organisations identify anomalies, correlate intelligence, prioritise vulnerabilities and, where appropriate, initiate defensive responses. However, greater autonomy also brings additional risks.

 

He said cybersecurity was no longer merely an information-technology issue, but a board-level, business-continuity, market-integrity and investor-confidence issue. Since cyber threats do not respect organisational, regulatory or national boundaries, the response also needs to extend across those boundaries.

 

He also highlighted quantum computing as an emerging cybersecurity risk and said financial-sector organisations need to begin migrating towards post-quantum cryptographic standards rather than waiting for quantum threats to materialise. SEBI has made quantum resilience a core pillar of its cyber strategy and is working on assessing quantum preparedness.  End

 

Reported by Kabir Sharma

Edited by Deepshikha Bhardwaj

 

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