No Standardised CAS Template Exists Worldwide, Says SEBI Whole-Time Member K.V.R. Murty

SEBI Weighs Targeted Safeguards as Retail Derivatives Risks Persist

The regulator is signalling a consultative approach to market rules, while considering whether active derivatives traders need additional guardrails.

CAS revisions underline the value of consultation

SEBI’s closing auction session (CAS) framework has been revised through multiple rounds of consultation, with the latest attracting around 20,000 participants and about 135,000 comments, Murty said. The regulator made changes after earlier consultations and expects the final framework to reflect market requirements.

Murty said there is no single CAS template followed worldwide, noting that markets evolve and require rules suited to their conditions. For investors and market institutions, the process highlights a trade-off regulators must manage: rules need to be workable in practice, while changes should preserve confidence in how the market functions. Extensive feedback can help surface implementation concerns, though the final test will be how the framework operates once in use.

Derivatives safeguards may go beyond disclosure

Murty described SEBI’s role as making risks visible so investors can make informed decisions, rather than preventing them from investing in a particular product. The regulator’s studies of derivatives losses were intended to show participants what they may face. But he added that some guardrails could be needed given the hyperactivity seen, especially on expiry days.

That leaves open how any safeguards might work; Murty did not set out specific measures. The policy challenge is to address risks without treating all investors or trading activity alike. Any future proposal would therefore matter not only for retail traders, but also for brokers and other market participants required to implement it. Investors should not read the comments as a ban or as confirmation that new rules have been finalised.

Technology is central to surveillance and enforcement

Murty said SEBI uses in-house artificial intelligence tools and near-real-time surveillance capabilities, with data informing its enforcement work. He also pointed to the need to build technology capabilities across market participants and infrastructure institutions, arguing that stronger surveillance and audit trails can help shorten the time between identifying a problem and taking action.

The regulator is also preparing guidance for market infrastructure institutions, intermediaries and other participants on technology risks, including quantum-related risks. Murty said SEBI had issued a consultation paper and received feedback. For markets, the direction is clear: technology is being treated both as a source of risk and as a tool for oversight. The effectiveness of that approach will depend on implementation and coordination, not surveillance capability alone.

Market development spans access, governance and fundraising

Beyond derivatives, SEBI’s stated priorities include reviewing listing and fundraising frameworks, examining the small and medium enterprise framework, deepening the bond market and improving access through KYC and onboarding changes. Murty also cited work on e-CAS, intended to provide a more representative view of investors’ financial assets, and on securities lending and borrowing and short selling.

He said domestic institutional investors had more than adequately compensated for movements in foreign investment and saw no cause for alarm. He also called for stronger board governance and more active participation by independent directors and audit committees. These priorities connect market growth with investor protection: broader participation and fundraising depend on transparent processes, reliable disclosures and confidence in oversight.

Key Highlights

• SEBI may consider additional guardrails for retail derivatives activity, particularly around expiry-day hyperactivity.
• The CAS consultation drew around 20,000 participants and approximately 135,000 comments in its latest round.
• Murty said the regulator uses data, surveillance and in-house AI tools in its oversight work.
• SEBI is working on technology-risk guidance for market institutions, intermediaries and other participants.
• Other stated priorities include e-CAS, bond-market development, the SME framework and easier investor onboarding.

Investor Note: SEBI’s comments indicate areas under consideration, not a final derivatives rulebook. Investors should distinguish consultations and stated priorities from implemented regulations, while weighing the risks of derivatives independently of any proposed safeguards.