With reference to SEBI's new market regulations, consider the following statements: 1. The auction was initiated to prevent large traders from manipulating closing prices. 2. The auction period was set at 60 minutes to ensure high liquidity. 3. The end-of-day auction period is set at 20 minutes. Which of the statements given above is/are correct?

SEBI Targets Market Manipulators with 20-Minute End-of-Day Auction

GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims + Mains· 15 September 2026

Market integrity vs liquidity: a GS3 case study on regulatory oversight in capital markets.

Why in news

SEBI directed local stock exchanges to implement a 20-minute end-of-day auction to prevent large traders from manipulating closing prices, following allegations against the Jane Street Group.

Background

The Securities and Exchange Board of India (SEBI) initiated the 20-minute auction in early August 2026. The measure aims to curb price manipulation by large traders during the final trading minutes of the day.

Facts for Prelims

BodySEBI: The primary regulator for the securities and commodity markets in India
FactThe end-of-day auction period is set at 20 minutes
FactJane Street Group: A firm facing allegations of market manipulation (denied by the firm)

Prelims practice question

With reference to SEBI's new market regulations, consider the following statements:

The auction was initiated to prevent large traders from manipulating closing prices.
The auction period was set at 60 minutes to ensure high liquidity.
The end-of-day auction period is set at 20 minutes.

Which of the statements given above is/are correct?

(a)1 only
(b)1 and 3 only
(c)2 and 3 only
(d)1, 2 and 3

Show answer

Answer: (b) 1 and 3 only — Statements 1 and 3 are correct. Statement 2 is incorrect: The auction period is set at 20 minutes.

For Mains

Q. Discuss how regulatory interventions like end-of-day auctions can balance the need for market integrity with the requirement for high liquidity in capital markets.

Dimensions to cover in your answer

Liquidity-Integrity Trade-off: Balancing the prevention of 'pump and dump' schemes with the need for continuous market depth.
Regulatory Friction: Impact of high securities transaction taxes on market participation and price discovery mechanisms.
Speculative Volatility: Addressing abrupt intraday trend reversals caused by large-scale institutional trading.

Keywords: Market Integrity · Price Discovery · Liquidity Constraints · Regulatory Oversight · Speculative Trading

Read the full news →Source: Economic Times ↗

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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.