The National Stock Exchange (NSE) have decided to implement call auction in pre open session from October 18 to reduce price volatility and better price discovery, a senior exchange official said here.
"The NSE has commenced mock trading for pre-open call auction and we are ready to launch on October 18," NSE's Chief Technology Officer, Ravi Apte told reporters here.
The introduction of pre-open session with a call auction mechanism is expected to reduce the quantum of volatility, typically visible in the first few minutes of a trading session.
The advantages of call auctions are it reduces price volatility due to multiple matching of orders at a single price, provides greater liquidity due to deeper demand supply schedule, better price discovery, reduced market impact and simultaneity of trades eliminates possibility of front running customer orders, Apte said.
Securities and Exchange Board of India (SEBI) had asked the exchanges to introduce call auction in pre-open session.
Initially call auction session will be applicable for Sensex 30 and Nifty 50 scrips and more scrips will be gradually added in the list, Apte said.
After the three months of observation, SEBI will review and decide about adding more scrips in pre-open call auction, he said.
The pre-open call auction session will be for 15 minutes between 9 am and 9.15 am. While the first eight minutes will be reserved for order entry, modification and cancellation, the next four minutes will be kept for order matching and trade confirmation. The remaining three minutes will be the buffer period to facilitate the transition from pre-open session to the normal market.
No comments:
Post a Comment