Stock exchanges and brokers may be among the biggest beneficiaries of the Securities and Exchange Board of India’s proposed changes to the newly launched closing auction system that’s caused chaos, while market makers may face tighter constraints. That’s the takeaway from market players after the regulator suggested a sweeping revamp of the mechanism that’s spurred wild swings at the end of trading sessions. In a discussion paper released on Saturday, SEBI made several proposals, including to determine the settlement price based on a blend of the 30-minute volume-weighted average price and a 10-minute auction window — or retain the old VWAP methodology for a year before shifting to the blended system.

In either scenario, the eventual price would lean more heavily on the continuous trading session, where the bulk of market activity takes place. That shift could make the closing process more predictable and help restore confidence. Meanwhile, market makers could face a less friendly regime as the regulator suggested restrictions to cancellation orders.

"The proposals are broadly positive for the market infrastructure ecosystem," said Kruti Shah, a quantitative analyst at Equirus Securities. The changes should make the closing process more orderly and reduce some of the uncertainty that has emerged around price discovery and expiry-day trading, benefiting exchanges and intermediaries other than market makers, she said.