Any Attempt To Defame CAS By Manipulation Will Be Dealt With Sternly, Warns SEBI's Pandey

Sebi Chairman Tuhin Kanta Pandey on Wednesday warned that any attempt to "defame" the newly introduced closing auction session (CAS) through manipulation will be dealt with sternly by the capital markets regulator.

Amid wide-ranging concerns expressed by market participants since CAS was introduced on August 3, Pandey said the regulator's ability to catch manipulation in CAS is higher than under the older volume weighted average price system (VWAP) it replaces.

"We can catch hold of manipulation in CAS relatively easily. CAS is for transparency. And if anybody feels that they will manipulate CAS for defaming the new system, they are in danger," Pandey told reporters on the sidelines of an event organised by industry association FICCI here.

"If there is manipulation in CAS, we will act strongly against it and act immediately," Pandey added.

Participation in the CAS framework is increasing, he said and specifically mentioned adoption by mutual funds and also proprietary traders.

"I think CAS participation is improving and will further improve. We are looking at the constraints for participation," Pandey said on Wednesday.

On August 12, Pandey had said that Sebi has not observed any manipulation in CAS since its introduction. On Monday, he also made it clear that the new framework is a major reform which is here to stay.

As per Sebi, a CAS-like framework has been adopted by major markets globally for up to two years now.

Sebi had introduced CAS to prevent market manipulation and ensure get more transparency. Under the framework, buy and sell orders are pooled together without immediate execution during a designated time window towards the end of trade under an auction style order matching process.

Introduction of the system led to what the Sebi chief had earlier referred as 'teething troubles'. He had also appealed to participants to undertake more efforts at learning the new framework, and also migrate to technology systems that support CAS.

Meanwhile, Pandey said Sebi will come out with more granular and updated data on Thursday on the performance of retail investors' bets in the futures and options market.

It can be recalled that earlier, a similar study by Sebi had revealed that over 90% of trades by retail investors led to losses. There were also reports of extreme steps like suicides being committed due to reverses in markets by some individuals. Sebi acted with a slew of measures aimed at lowering speculation in the market and protecting the investors.

Data released by the Finance Ministry earlier this month revealed individual investors' losses in derivative trades reduced to ₹91,685 crore in FY26 from ₹1.1 lakh crore in FY25.

Addressing the conference earlier, Pandey said Sebi will soon issue guidelines for responsible use of artificial intelligence/machine learning in the markets which will have a tiered approach to set accountability and governance controls.

"The framework shall require 'Kill Switch' and 'Humans in the Loop' controls, along with data controls," he added.

Pandey also made it clear that regulated entities are responsible for every AI tool they deploy, including on aspects such as privacy, security and integrity of investor data.

The Sebi chairman reiterated that we aspire to not only attract foreign investments into Indian markets, but also act as a hub for global fund management activity, and added that the proposed framework for portfolio managers will deal with this subject.

He urged industry bodies to identify high-potential enterprises in sectors such as manufacturing, energy, IT and logistics that are ready to access the capital markets and educate them on the benefits of listing.