Sebi's closing auction session triggers 6,000 point Sensex swings
Business
Sebi rolled out the Closing Auction Session (CAS) last month to make closing prices for Sensex stocks more accurate.
But instead of smoother trading, CAS has triggered some serious rollercoaster moments: Sensex swung over 6,000 points during two recent expiration days alone.
Put premiums surge 500% after CAS
On August 27, Sensex dropped more than 2,000 points in minutes during CAS and closed nearly 540 points down.
Then on September 3 (a Thursday), it bounced almost 3,900 points both ways. This chaos sent put option premiums soaring by up to 500%.
Traders say big trades in the low-liquidity auction can mess with settlement prices and make derivatives unpredictable.
Sebi has now promised to review how CAS is affecting settlements and will release a consultation paper soon.