India's two equity bourses — the National Stock Exchange of India Ltd. and BSE Ltd. — introduced on Monday an auction to determine the closing price of more than 200 stocks with derivatives contracts, replacing a decades-old methodology.

The new closing auction system aims to improve price discovery and market efficiency. However, the transition has created confusion among traders who were accustomed to the previous mechanism.

Market participants are grappling with the changes in trading procedures and timing. The auction process involves multiple stages and specific cut-off times that differ from the old system.

Brokers and trading firms are adapting their systems and strategies to accommodate the new framework. The exchanges have provided guidance materials, but some traders remain uncertain about the implementation details and its impact on their trading algorithms.