BSE's Sundararaman Ramamurthy warns of low closing auction uptake
Business
India's new closing auction system, designed to make stock prices more accurate at the end of the trading day, is not catching on: most traders are skipping it even a month after launch.
BSE CEO Sundararaman Ramamurthy shared his concern, saying that while a few institutions are taking part, most of the market is sitting it out.
Closing volatility threatens equity derivative settlements
Because so few are participating, trading volumes stay really low in those final minutes, leading to wild price swings.
That is a problem since these prices decide how expiring equity derivatives get settled.
Regulators such as SEBI have noticed and plan to suggest changes soon.
Meanwhile, exchanges are teaming up with high-frequency traders and others to deepen liquidity.