·The Hindu·15 marks·250–350 words

Examine how recent SEBI reforms like the Closing Auction Session aim to balance market transparency with ease of doing business.

In this answer
  1. Reforms strengthening transparency
  2. Reforms easing doing business
  3. Where the balance is tested

SEBI's mandate under the SEBI Act, 1992 is twofold — protecting investors and promoting orderly market development. Its recent reform cycle, headlined by the Closing Auction Session (CAS), tries to tighten price integrity without adding avoidable compliance friction on market participants.

Reforms strengthening transparency

  • CAS, notified in January 2026 and rolled out in the equity cash segment, replaces the earlier volume-weighted average price method of fixing closing prices with a dedicated auction window in which orders are pooled and matched through auction-style price discovery [1].
  • SEBI's consultation paper proposed CAS as a separate ~20-minute session for liquid F&O stocks, extendable later to all scrips, alongside modifications to the pre-open session [2][1]. This curbs manipulation at the close, which matters because index funds, ETFs and derivatives settlement all key off closing prices.
  • The proposed SOP for unscheduled market holidays, announced at NSE Clearing's 30th anniversary, would replace case-by-case decisions by exchanges and clearing corporations with a codified protocol, reducing settlement and counterparty risk [3].

Reforms easing doing business

  • Optional T+0 settlement alongside T+1 leaves the choice with brokers and institutions rather than mandating migration [4].
  • ESG assurance and value-chain disclosure relaxations (2025) softened reporting burdens for listed entities [5].
  • Enhancement of the Basic Services Demat Account lowered costs for small investors [6].

Where the balance is tested

  • CAS imposes real transitional costs — order-management systems, client communication and revised execution strategies for passive funds.
  • Gains depend on participation depth; SEBI has signalled no immediate changes, expecting volumes to build [3].
  • The holiday SOP remains a proposal, not yet a notified framework.

Overall, SEBI is calibrating rather than trading off — embedding transparency into market microstructure while keeping compliance optional, phased and consultative. Sustaining this balance through post-implementation review of CAS, and early notification of the holiday SOP, would deepen investor confidence and support resource mobilisation for growth.

Sources

  1. 1SEBI Circular — Introduction of Closing Auction Session (CAS) in the Equity Cash Segment and certain modifications in the Pre-Open Auction Session, January 16, 2026CAS notification, replacement of VWAP-based closing price, pre-open session changes
  2. 2SEBI Consultation Paper — Introduction of Closing Auction Session in the equity cash segment, August 2025session design, duration, F&O-stock coverage and phased extension
  3. 3SEBI to propose SOP for unscheduled holidays — The Hindu, 28 August 2026SOP proposal at NSE Clearing's 30th anniversary; SEBI's stated position on CAS continuity
  4. 4SEBI Circular — Enhancement in the scope of optional T+0 rolling settlement cycle in addition to the existing T+1 settlement cycle in Equity Cash Markets, December 2024optional, non-mandatory settlement migration
  5. 5SEBI Circular — Measures to facilitate ease of doing business with respect to framework for assurance or assessment, ESG disclosures for value chain, March 2025ESG disclosure relaxations for listed entities
  6. 6SEBI Circular — Ease of investments and ease of doing business measures: enhancing the Facility for Basic Services Demat Account (BSDA), December 2025BSDA enhancement for small investors

More from this note