The government plans to extend SEBI Whole-Time Member Kamlesh Chandra Varshney’s term by up to 12 months for regulatory continuity. This move follows market criticism regarding the Closing Auction Session, which has triggered volatility and prompted the regulator to review derivative settlement rules.
The central government is set to extend the tenure of Securities and Exchange Board of India (SEBI) Whole-Time Member Kamlesh Chandra Varshney by six to twelve months. This decision aims to ensure regulatory stability as the capital markets regulator navigates a sensitive period marked by technical and operational challenges in the newly launched Closing Auction Session (CAS).
Kamlesh Chandra Varshney, a 1990-batch Indian Revenue Service officer, has been a key figure at SEBI since 2023, overseeing critical departments such as surveillance, enforcement, and legal affairs. His retention is considered vital by the government, particularly as the regulator faces intense scrutiny over the Closing Auction Session, which was implemented on August 3, 2026. While the tenure for Varshney is slated for an extension, the term of fellow Whole-Time Member Amarjeet Singh is concluding this month without a similar renewal.
The Closing Auction Session was designed to modernize the closing price discovery process and align domestic markets with global standards. However, since its launch, the system has faced significant criticism from traders and market participants. There have been reports of unusual price volatility and unexpected spikes, particularly during the 20-minute window on index expiry days. These structural teething issues have raised concerns among investors and intermediaries about the efficiency of the new mechanism compared to the previous volume-weighted average price discovery method.
Adding to the regulatory pressure, market data indicates that stockbrokers have reported a decline in their futures and options (F&O) trading revenue, with some estimating drops of up to 20% following the implementation of the new closing price mechanism. The regulator has also had to deal with instances of market manipulation within the system, including a recent case where penalties were imposed on entities for alleged rigging during the session.
In a significant pivot, SEBI announced on September 3, 2026, that it is reviewing the methodology for calculating settlement prices for derivative contracts. The regulator plans to release a consultation paper within the coming week to address the concerns raised by market participants. For investors and traders, this upcoming policy revision is the primary monitorable. Any changes to the settlement calculation or the auction framework may impact how derivative strategies are executed and could influence short-term market volatility.
Investors should track the upcoming consultation paper and any subsequent regulatory directives, as these will define the future operation of the Closing Auction Session and the stability of derivative market settlements.