CAS needs to be rolled back

General
124

What could go wrong if SEBI continued using the VWAP only for those stocks whose closing price affects the settlement of F&O contracts expiring on that day, and use CAS for all other stocks and on all other days ? What are the potential drawbacks of having a different closing price mechanism only for expiry day F&O stocks ?

@cvs @pavinjoseph @BB789 any thoughts on this ?

125

Forget VWAP, it’s not coming back! :sweat_smile:
Technically the CAS implementation by itself seems to be okay, it’s just the other mechanisms surrounding it that needs to be worked on:

  • liquidity continues to be thin :pouring_liquid::arrow_down:
  • SLBM continues to be hard-(er) compared to buying stocks on margin and of course the liquidity is thin there too

Pros:

  • manipulators are actually being caught in 2 weeks instead of 2 years! :partying_face:
  • with enough liquidity, the closing price would be more representative of market dynamics than VWAP ever could! :white_check_mark:

FnO traders who do not want to deal with this new mechanism (until it settles down) should square off positions before 15:15 on expiry day. Gamblers (honestly I don’t know what else to call buyers & sellers who trade the last few minutes of expiry) OTOH would have more avenue to play! :black_joker:

1 Like