Sebi may partly reverse derivative settlement rules after pushback

SEBI is considering a partial change to its derivatives settlement framework following market pushback. As of Tuesday, October 6, 2026, the regulator may base settlement on the volume weighted average price recorded during the last 30 minutes of trading. Closing auctions could still be used for less liquid stocks, creating a differentiated approach based on market liquidity. The available information does not specify the affected contracts, implementation date, consultation process or whether the proposal has received final approval, so the possible change remains subject to regulatory confirmation.

The settlement method matters because it determines the reference price for expiring derivatives and can influence trading activity near the close. A last 30 minutes volume weighted average may reduce dependence on a single closing print, while auctions may provide a more structured price discovery process where liquidity is limited. Exchange operators, including listed BSE, brokerages, derivatives traders and less liquid cash market stocks could be affected through changes in volumes and closing activity. A formal SEBI circular with scope and timing would confirm the reading. Retention of existing rules or a narrowly limited rollout would weaken it.