Stock Market New Timing: If you are connected to the stock market ( Stock Market New Timing ) , then this news is very important for you. From August, the exchanges are going to implement a new change. You must be aware of this new change. Market regulator ‘Securities and Exchange Board of India’ i.e. SEBI has announced a ‘Closing Auction Session’ (CAS) for securities. In which F&O trading has also been allowed so that it will be more difficult to manipulate the final prices. From Monday, the exchanges will switch from the Volume-Weighted Average Price (VWAP) system for F&O stocks to the CAS system.
What exactly will change?
To determine the final price of shares, CAS will be a new 15-minute session held from 3:15 PM to 3:30 PM. Till now, the final price of a share was mainly based on the average price of transactions in the previous 30 minutes i.e. between 3:00 PM and 3:30 PM. From August 3, the exchange will conduct a closing auction to determine the final price. Under CAS, buy and sell orders will be aggregated and matched at a single equilibrium price. Retail traders dealing in equity and derivatives markets should note that in the first phase, this measure will apply only to stocks in which F&O trading is permitted.
Will retail investors be affected?
Prasenjit Paul, fund manager at 129 Wealth and research analyst at Paul Asset, said that while this is a largely behind-the-scenes change for retail investors, it will lead to more accurate closing prices, which will lead to more accurate NAV and portfolio valuation of mutual funds. He added that initially, the system will be applicable only to stocks in the F&O segment, while most listed stocks will continue to trade as before.
Why is SEBI making this change?
The change aims to address two issues. Zerodha founder Nitin Kamath said in a recent social media post that the move is aimed at preventing manipulation of share prices. He said that passive funds that track indices have to execute large orders to match the closing price at the end of the day, and since these orders can change prices, the risk of tracking errors increases.
Secondly, he observed that large orders placed in the last few minutes can significantly affect the closing prices of stocks and the indices they are part of. “There are concerns that this could be used to push the index to a certain closing level,” he said. “Since CAS brings all the orders together and matches them at a single price, it is difficult to influence the closing price.”