SEBI considers implementing auction session at market close to minimise tracking errors for passive funds

SEBI Considers Auction Session for Passive Funds to Minimize Tracking Errors: The Securities and Exchange Board of India (SEBI) is considering the implementation of an auction session at the market’s close to minimize tracking errors for passive funds. Passive funds, such as index funds and exchange-traded funds (ETFs), aim to mirror the performance of stock indices. However, these funds often face tracking errors due to liquidity issues and differences in the prices of underlying securities at market close. By introducing auction sessions, SEBI aims to reduce the discrepancies and ensure that the passive funds track the indices more accurately. This move is expected to enhance the efficiency and transparency of passive investing in India, benefiting both fund managers and investors.