SEBI warns against manipulating new Closing Auction Session (CAS) market

SEBI Chairman Tuhin Kanta Pandey has warned of strict action against any attempts to manipulate the new Closing Auction Session (CAS), noting that the regulator's ability to detect manipulation is now much stronger than under the old VWAP system.

Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has warned market participants against attempts to manipulate the cash market through the new Closing Auction Session (CAS), saying the regulator's ability to detect such activity is stronger than under the earlier VWAP system.

Speaking to the media on the sidelines of the 23rd FICCI Capital Markets Conference 2026 in Mumbai on Wednesday, Pandey said participation in the CAS is improving and is expected to increase further. "I think participation in the CAS is improving and will improve further. We are looking at the constraints around participation," the SEBI Chairman said.

Warning Against CAS Manipulation

He said mutual funds have increased their participation in the cash market, while proprietary traders have also stepped up their participation. However, Pandey made it clear that increased participation would not mean that attempts to manipulate the market would be tolerated. "Mutual funds have increased their participation, and even proprietary traders have increased their participation. But we want to make one thing very clear: if anyone manipulates the CAS market, we will take strict action against them, and we will do so immediately," he said.

The SEBI Chairman also highlighted the regulator's stronger ability to identify manipulation under the CAS mechanism compared with the earlier VWAP system. "Our capability to detect manipulation in the CAS market is much stronger compared to the old VWAP system," Pandey said.

He said the cash market mechanism is intended to improve transparency and warned market participants against assuming that manipulation could go undetected. "The cash market is meant to bring transparency. But if anyone thinks they can manipulate the cash market and get away with it, they are very much mistaken," he said.

The comments come as SEBI is also looking at constraints around participation in the CAS market. The "old VWAP system" typically refers to the traditional Volume-Weighted Average Price mechanism previously used by the Securities and Exchange Board of India (SEBI) to discover closing prices. SEBI replaced this method in August 2026 with a new Closing Auction Session (CAS) to improve transparency and curb market manipulation

Reforms Planned for SME Framework

On the Small Medium Enterprises segment, the SEBI Chairman said some provisions of the existing framework were creating difficulties for companies and affecting their growth and trading. He said issues included the creation of odd lots, which can make it difficult for investors to trade SME shares, while the market-making framework was not working properly and the cost of market makers was increasing.

The regulator also flagged concerns around underwriting costs and said companies on the SME platform face significantly higher costs compared with the mainboard. Pandey said SEBI would bring a comprehensive reform proposal for the SME framework and issue a consultation paper. (ANI)

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