Mumbai, September 10 (IANS). SEBI i.e. Securities and Exchange Board of India (SEBI) Chairman Tuhin Kant Pandey said on Thursday that the market regulator is reviewing the existing method of determining the closing price under the Closing Auction Session (CAS) on the expiry day of derivatives contracts and necessary changes are being worked on in it. He acknowledged that some challenges were faced in the initial phase of implementation of the CAS system, especially related to liquidity.
Speaking on the second day of the 'Global Fintech Fest 2026' held in Mumbai, Pandey clarified that the closing auction session system will continue and there is no idea of withdrawing it. He said that its functioning has become more streamlined with time and positive feedback has also been received from market participants.
Pandey said that global index provider MSCI has also confirmed that the recent index rebalancing under the CAS framework was successful and smoothly conducted. He said that this shows that the new system is gradually becoming effective.
He further said that like any new framework, liquidity problems were observed during the initial implementation of CAS. However, it has improved with time. “Liquidity was a challenge initially, but over time liquidity builds in the market and the system becomes more stable,” he said.
In his address, the SEBI chief also discussed in detail the rapidly growing use of Artificial Intelligence (AI) in the financial markets. Specifically mentioning agentic AI systems, he said that with the increasing use of this new technology, regulators and market participants need to set clear limits and rules for its use.
Pandey said that in the context of agentic AI, it should be clear what kind of information it will get access to, what will be its level of autonomy, what activities will be allowed for it and how transparent its decision process will be. He stressed that it is also necessary to set some strict limits for such systems so that it is clear what AI cannot do.
He explained that every AI system used at the production level should have auditable records, research-based verification and a detailed log of changes. This will ensure accountability and transparency and make it easier to review any decisions or errors.
Tuhin Kanta Pandey said that innovation and security should not be considered as substitutes for each other for the development of financial markets. “Growing fast and growing safely are not conflicting goals,” he said.
SEBI Chairman further said, “Sustainable progress of any market is possible only when innovation is accompanied by investor confidence. Trust is strengthened only when the financial system is flexible, transparent and secure.”
The SEBI chairman said the biggest challenge before the regulator is to create a balanced framework that encourages technological innovation but also protects fundamental principles such as investor protection, market fairness and financial stability.
–IANS
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