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Thu, December 5, 2024

SEBI considers implementing auction session at market close to minimise tracking errors for passive funds


Published on 2024-12-05 10:01:18 - Thomas Matters, WOPRAI
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  • The proposed CAS would reduce price volatility at market close, particularly on days of index rebalancing and derivative expiry. It would also enable more efficient execution of large orders at the closing price,
The Securities and Exchange Board of India (SEBI) is contemplating the introduction of an auction session at the close of market trading to reduce tracking errors for passive funds. This initiative aims to align the closing prices of stocks more closely with their actual market value, thereby enhancing the accuracy of index funds and ETFs in replicating their benchmark indices. The proposal comes in response to feedback from passive fund managers who have noted discrepancies between the closing prices and the true market value, which can lead to tracking errors. SEBI's move is part of a broader effort to improve market efficiency and investor confidence in passive investment vehicles.

Read the Full Business Today Article at:
[ https://www.businesstoday.in/markets/top-story/story/sebi-considers-implementing-auction-session-at-market-close-to-minimise-tracking-errors-for-passive-funds-456363-2024-12-05 ]
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