The Securities and Exchange Board of India (SEBI) is proposing a new method to determine the closing price of stocks in order to improve trading accuracy for investors.

The regulator suggests replacing the current volume-weighted average price (VWAP) method with a close-auction session (CAS). This change is a response to the increasing popularity of passive investing and concerns about potential discrepancies in index tracking, particularly on volatile event days.

Under the proposed CAS, buyers and sellers will submit their price quotes, which will be used to establish an equilibrium price that will serve as the closing price for each stock in the equity cash segment. This approach is in line with international practices and is expected to provide a more precise closing price, benefiting investors by reducing the impact of market fluctuations during the final moments of trading.