India's market regulator has accelerated discussions with high-frequency trading firms and other market players, people familiar with the matter said, on growing concerns over its new auction system to determine stock closing prices.

The Securities and Exchange Board of India (SEBI) initiated the closing auction mechanism to enhance price discovery and market efficiency. However, SEBI has received feedback from market participants questioning the effectiveness and fairness of the current implementation.

Sources indicate that high-frequency trading firms have raised specific technical concerns about latency issues and order execution protocols within the auction framework. These firms argue that the current system may inadvertently favor certain participants with faster connectivity.

Market observers note that the review process involves consultations with major stock exchanges, including the National Stock Exchange and BSE Limited, to assess potential modifications. The goal is to address participant concerns while maintaining the auction's intended benefits of improved transparency and reduced manipulation risks.

Regulatory officials have emphasized that any changes will prioritize market integrity and equal access for all participants. A final decision on modifications is expected in the coming weeks as India seeks to balance innovation with fair market practices.