By Savio Shetty and Samie Modak For much of the first week of trading under India’s new auction system to set closing prices, traders feared the reform was faltering. As calls grew for a rollback, SEBI met top brokerages and said the closing auction would stay, noting that board member KVR Murty called the early issues merely teething problems and that confidence remained as participation rises.

Much of the volatility stemmed from weak participation; many proprietary firms and high‑frequency traders stayed away or cut activity as the system settled in. “Allowing time for liquidity to develop may have smoothed the transition,” said Mayank Sachan of Zenskar Research. Goldman Sachs noted that thin liquidity let modest orders move prices far more than usual, making the official closing level swing sharply.

The disruption raised concerns about broker earnings; Zerodha Broking estimates a 1‑5 % revenue cut, while Jefferies projects a larger impact, estimating that a 10‑20 % decline in expiry‑day contracts could translate into a 5‑10 % drop in overall options volumes. The NSE, reliant on derivative fees, may feel the impact, and traders such as Aamodh Kuthethur warn that long‑standing strategies are now broken.