Nithin Kamath has warned that India’s new Closing Auction Session could affect how brokers earn revenue from the end of the trading day. The change began on August 3 for eligible stocks and has drawn attention because it alters the process used to establish closing prices.
Mint reported that the Zerodha co-founder and chief executive said the new system could make the final part of the trading day more complex and reduce some revenue opportunities for brokers. The comments were made in the context of changes introduced by the stock exchanges and market regulator.
Zerodha’s own explanation says stocks in the futures and options segment move from continuous trading into a dedicated auction process. The company describes stages for reference-price calculation, order entry, random closure of the order window and final order matching.
The change affects more than a displayed number on a chart. Closing prices are used in portfolio valuation, index calculations, mutual-fund net asset values and derivatives settlement. Traders also need to account for revised intraday auto square-off timings for affected products.
Kamath’s warning is a business observation, not a prediction that Zerodha will stop offering services or that investors will automatically lose money. Customers should read the exchange and broker notices for the rules that apply to their products and avoid treating a social-media summary as personal investment advice.
Sources: Mint — https://www.livemint.com/market/stock-market-news/nithin-kamath-warns-zerodha-could-lose-revenue-from-august-3-heres-whats-changing-in-the-stock-market-timings/amp-11785308891883.html; Zerodha — https://zerodha.com/z-connect/general/everything-you-need-to-know-about-closing-auction-session-cas
