CAS chaos: Retail traders call for boycott, declare 'No Trade Day'
Several retail traders are allegedly boycotting the stock market today, not trading Indian equities as a mark of protest against the newly introduced Closing Auction
Several retail traders are allegedly boycotting the stock market today, not trading Indian equities as a mark of protest against the newly introduced Closing Auction Session (CAS) that has triggered panic among investors this month.Stock exchanges introduced the new CAS system this month, changing the way closing prices are calculated for stocks included in the futures and options (F&O) segment. What followed was strong volatility and a sharp divergence in the benchmark indices’ closing prices.Several investors took to social media platforms, encouraging others as well to quit trading on Wednesday as a mark of protest against the system, along with the higher securities transaction tax (STT) and changing rules.“I carried zero positions in indices, won’t take any indices trades or new SSO trades today. Have SSO positions open which I’ll manage if needed. Let’s observe #NoTradingDay today and make it a success,” said an X user named Ashish Gupta, who claims to be a full-time trader.Several others also took to X to say that they are not trading today.
"The decision day has arrived. If you genuinely want Indian traders to prosper, do not take a single trade today. I will not be punching even a single order myself. If the volume and liquidity are actually hurt, it will send a message that retail traders have power and they can also unite against a draconian rule,” another X user wrote.Some, however, questioned the timing of the boycott, saying that Tuesday or Thursday should have been picked as higher trading on expiry day would have further intensified the impact. Notably, no official stock broker association has yet officially announced any such boycott.What is CAS?Under CAS, continuous trading in stocks that also have F&O contracts ends at 3:15 pm. However, this does not mean these stocks are closed for the day 15 minutes before the broader market shuts. From 3:15 pm onwards, these stocks move into the CAS, a 20-minute auction process that runs until 3:35 pm to determine their official closing prices.
Meanwhile, stocks that are not part of the F&O segment continue to trade as usual until 3:30 pm.During the 20-minute auction window, buy and sell orders for eligible stocks are collected and matched at a single equilibrium price. This mechanism is aimed at improving price discovery and reducing the impact of last-minute trades on closing prices.Also read | Old strategies buried alive: How CAS hit Dalal Street tradersInitial teething issues or flaws?While panic prevails on Dalal Street, some analysts pointed out that these are initial teething issues that will gradually fade away. SEBI officials during their meetings with market players said that the new system is just facing teething issues in its early days and that the regulator remains confident it will improve as participation rises.Vinod Nair, Head of Research at Geojit Investments, said the gap between the 3:30 pm and 3:40 pm closing prices of Nifty stocks and the index, along with the divergence with the Sensex, suggested that the new system was not functioning as intended.
The BriefWire