India’s capital markets were never meant to be a private club for institutions. They grew because ordinary Indians trusted them to be open, transparent, and fair. That trust is now under strain. SEBI is reshaping the rules in ways that make life smoother for large players, while increasingly leaving retail traders and small investors to absorb the shocks. The danger is not that institutions are being given greater flexibility; it is that the flexibility is coming at the cost of the openness that allowed smaller participants to compete and participate meaningfully.

Closing Auction Session Under Scrutiny

The latest flashpoint is the Closing Auction Session, introduced on August 3. For years, the closing price reflected the volume-weighted average of the final half hour of continuous trading. It was not perfect, yet it kept everyone in the same arena. CAS replaced that with a dedicated 20-minute auction after continuous trading stops at 3:15 pm for stocks that have derivatives. The official close is now set by matching orders in that narrow window. SEBI presented the change as modernisation, better price discovery, and alignment with global exchanges. What it delivered in its first month was something else entirely.

Equity derivatives turnover on the NSE collapsed in August to its lowest level since November 2023. Bank Nifty futures volumes also fell steeply. Equity options contracts dropped roughly 30 per cent month on month. Traders responded the only way they could—they closed positions early, cut expiry exposure, and bought more hedges. A mechanism sold........

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