High-frequency trading firms are largely shunning India's new closing window mechanism for setting official stock prices, according to executives who spoke to Bloomberg. The firms cite challenges including SEBI's short-selling restrictions that make it difficult to borrow shares for betting on declines. The new system aims to improve price discovery for India's $5.2 trillion market, but industry participants raise concerns about implementation hurdles.

Trading firms have requested anonymity when discussing the regulatory challenges. The controversy highlights tensions between market modernization efforts and existing regulatory frameworks governing short-selling activities in Indian markets.