The introduction of the Closing Auction Session (CAS) on India's BSE and NSE has triggered immediate scrutiny over market stability, with industry leaders pointing to underlying structural vulnerabilities.
Nithin Kamath, CEO and founder of Zerodha, acknowledged the mechanism's theoretical merit but argued that the volatile closing prices observed since its launch on Monday expose deeper cracks in the market's architecture.
Kamath's comments underscore a growing concern that the new auction format, designed to reduce end-of-day volatility, is instead amplifying price dislocations.
The sharp swings suggest that liquidity dynamics at the close are not yet robust enough to absorb the order flow, raising questions about the immediate efficacy of the reform.
This development adds a layer of complexity to the broader market structure overhaul that took effect on August 3.
The criticism comes against a backdrop of heightened sensitivity to market integrity in India.