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India’s market regulator SEBI is expected to issue guidelines on determining derivatives settlement prices on expiry days within a week, chairman Tuhin Kanta Pandey said on Saturday, October 10, 2026. The proposed changes follow a review of the Closing Auction Session (CAS) mechanism, which has raised concerns about how closing prices in the equity market affect derivative contract settlements.

Speaking at an event organised by the BSE Brokers’ Forum, Pandey said the Securities and Exchange Board of India (SEBI) was examining public feedback on its consultation paper before finalising the rules.

The regulator received around 20,000 comments on the proposals by 7 pm on October 3, 2026, according to a post published by SEBI on X. The volume of responses highlights the market's interest in changes that could affect traders, brokers and other participants in India's derivatives segment.

Why SEBI Is Reviewing the Closing Auction Session

The Closing Auction Session is designed to determine closing prices through an auction process. Such prices can influence how certain financial contracts are valued and settled, making the methodology relevant to both cash-market participants and derivatives traders.

In September 2026, SEBI proposed changes to the CAS framework and the methodology used to determine settlement prices for index and stock derivatives on expiry days. The review followed the introduction of CAS in the equity cash segment and concerns about its potential impact on derivatives settlement prices.

Expiry days attract significant attention from market participants because derivative contracts reach the end of their trading life and must be settled according to the applicable rules. Changes to the settlement methodology can affect trading strategies, risk management and the way participants manage positions near market close.

SEBI's consultation process sought feedback on aspects of CAS, market timings and derivative settlement methods. The forthcoming guidelines will indicate how the regulator intends to address the concerns raised during that process.

The final framework will be closely watched by brokers and traders seeking clarity on expiry-day pricing. Its practical impact will depend on the detailed rules, implementation timeline and any transition arrangements announced by the regulator.

Broker Compliance, Overseas Investors and AI Rules

Pandey also outlined several other regulatory initiatives aimed at improving market infrastructure, reducing unnecessary compliance burdens and strengthening safeguards.

SEBI is reviewing the Depositories and Participants Regulations to simplify the existing framework and improve fraud prevention. The regulator is also considering a graded compliance system for brokers based on their size, client exposure and dependence on technology.

"One size need not fit all," Pandey said, explaining the rationale behind a framework that would account for differences between market intermediaries.

The regulator is separately working to address transactions such as tender offers, share buybacks and offers for sale that remain outside the interoperability framework and require parallel clearing arrangements. Implementation of the proposed changes is targeted for the end of November 2026.

The move is expected to improve capital efficiency and lower compliance costs without compromising settlement safety.

SEBI is also considering easier digital onboarding for Persons Resident Outside India, allowing eligible overseas investors to access Indian markets without being physically present. Pandey said the regulator had received more than 400 comments on the proposal and would issue a circular shortly.

Cybersecurity and operational resilience remain other areas of focus. SEBI is strengthening business continuity, disaster recovery, cybersecurity safeguards and governance across market infrastructure institutions.

The regulator is also preparing guidelines for the responsible use of artificial intelligence and machine learning. The proposed approach will include tiered requirements, clear accountability, data controls, emergency shutdown mechanisms, commonly known as kill switches, and human oversight.

Key Takeaways

• Derivatives guidelines: SEBI expects to issue guidance on expiry-day settlement prices within a week.

• Public feedback: The regulator received around 20,000 comments on its CAS consultation paper by October 3, 2026.

• Broker regulations: A graded compliance framework could tailor requirements to brokers' scale, client exposure and technology dependence.

• Other reforms: SEBI is advancing overseas investor onboarding, clearing interoperability and responsible AI rules.

What Market Participants Should Watch Next

The immediate focus is on the detailed CAS guidelines and how SEBI addresses concerns about derivative settlement prices. Traders and brokers will need to review the final provisions carefully before adjusting their processes or strategies.

The proposed end-November deadline for clearing-related changes and the upcoming rules on overseas investor onboarding and AI governance will also shape the regulator's next phase of reforms.

For now, the key question is whether the final CAS framework can provide greater clarity on expiry-day pricing while preserving orderly and reliable market settlement.

What changes would you like to see in India's derivatives settlement rules? Share your views in the comments.

Disclaimer: This article is based on the information available from the supplied news report and statements attributed to SEBI chairman Tuhin Kanta Pandey; readers should consult official SEBI announcements for final regulatory details.