India's auction-based stock-price system faces 1st options test August 25
India's new auction-based stock-price system, rolled out on August 3, is about to get its first real challenge during the monthly derivatives expiration on Tuesday, August 25, 2026.
The new system has operated through regular trading days and weekly expirations since its launch on Aug. 3; this time it'll have to deal with physically settled single-stock options, which could mean bigger swings in prices and worries about possible manipulation.
Lower liquidity as SEBI extends hours
Since the system launched, fewer high-frequency traders and proprietary firms have been joining in, leading to lower auction volumes.
Arbitrage traders have also lost some of their most profitable opportunities because the late-session window for trading stocks and derivatives at the same time has narrowed.
The mechanism has already drawn regulatory scrutiny, with the Securities and Exchange Board of India, or SEBI, last week barring two firms, including a J.P. Morgan unit, over alleged price manipulation.
With more risk on the table for Tuesday, August 25, 2026, SEBI has even extended post-auction trading hours so investors can adjust their positions if needed.
All eyes are now on how the system holds up when things get busy.