India's market regulator SEBI is set to partly reverse its new derivatives settlement rules after strong pushback from traders and exchanges. Here is what is happening and what it means.

In August, SEBI introduced a closing auction session, or CAS, to set the settlement price of equity derivatives. Traders worried the short auction window could be manipulated and make settlement prices less fair. Around 20,000 suggestions poured in during the consultation that followed, and the NSE asked for more time.

SEBI now plans to suspend the CAS for derivatives settlement for at least a year. Instead, the old method — a 30-minute volume-weighted average price, or VWAP — will be used to compute settlement values. The consultation on a fresh version of CAS will continue separately.

For ordinary investors, the change means derivatives will settle the way they did before August: based on average traded prices across the last half hour of the session, not a brief closing auction. The move shows SEBI is willing to pause complex reforms when the market pushes back with data.

Sources: finimize.com; thehindubusinessline.com.