Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has stressed the need for a strong and efficient capital market that can raise funds, manage financial risks and increase investor confidence.
Speaking at the 12th International Convention of the Commodity and Capital Market Participants Association of India in New Delhi, Pandey said SEBI is working to strengthen the market framework so that households can invest with greater confidence, businesses can access capital for expansion and market intermediaries continue to follow high standards of conduct.
SEBI Reviewing Derivatives Settlement Framework
Pandey said SEBI is examining concerns surrounding the settlement price mechanism for derivatives on expiry days following the introduction of the Closing Auction Session (CAS).
The CAS mechanism was introduced to improve price discovery for eligible stocks at the close of trading. Instead of depending only on volume-weighted average prices, the system uses a call-auction process to determine a single equilibrium price.
The regulator is also looking at ways to improve liquidity in the cash market and encourage wider participation. According to Pandey, strengthening securities borrowing and lending could further support market efficiency.
Focus on Liquidity, Hedging and Arbitrage
The SEBI chairman highlighted the importance of efficient hedging and arbitrage in improving price discovery and strengthening the relationship between cash and derivatives markets.
SEBI is also reviewing position limits for non-agricultural commodity contracts. The objective is to improve market liquidity and market depth while ensuring that appropriate risk-management measures remain in place.
Pandey said these measures are part of broader efforts to create a market structure that supports investment, capital formation and responsible participation.
Building Investor Confidence
A well-functioning capital market plays an important role in helping companies raise money while giving investors opportunities to participate in economic growth. SEBI’s ongoing review of market mechanisms is aimed at improving efficiency while maintaining adequate safeguards against financial risks.
The regulator’s focus remains on developing deeper markets, improving price discovery and maintaining confidence among investors and other market participants.
Disclaimer: This article is intended for general informational purposes only. The views and regulatory developments mentioned above should not be considered investment or financial advice. Investors should independently evaluate relevant information and consult a qualified financial professional before making investment decisions.