(Bloomberg) -- India’s markets regulator proposed sweeping changes to the closing auction system, including a possible return to the previous method for settling derivatives on expiry days, after sharp price swings and liquidity concerns emerged around the month-old mechanism.
The Securities and Exchange Board of India planned amendments include derivatives settlement price, auction trading time, and order cancellations, according to a discussion paper released Saturday.
The biggest adjustments being considered relate to the settlement price for futures and options contracts and the timing of the closing auction window.
The plan cuts the auction window to 10 minutes from the current 20 minutes. The regulator has also sought feedback on starting the auction-based mechanism after the close of regular trading at 3:30 p.m. in Mumbai, rather than the current start time of 3:15 p.m., it said in the paper.
Under both the new options, trading derivatives contracts will conclude just five minutes after the close of the auction.