India’s index options trading volume drops about 27% in the first week after a new closing auction mechanism is introduced, according to market reports. Traders are adjusting strategies following one of India’s biggest recent market-structure changes tied to how options positions are settled around expiry.
Multiple outlets link the decline to changes in liquidity and participation during the transition period. Business Line reports that proprietary trading firms and high-frequency traders that typically help provide liquidity around expiry days either stay away from the auction or cut back activity in the initial days. Bloomberg similarly notes that the new auction disrupts established trading approaches, leading to lower index-options volumes as participants recalibrate.
While both outlets describe the same overall drop and the same broad drivers, their emphasis differs: Bloomberg focuses on the magnitude of the volume decline and the strategic impact of the auction on trading behavior, while Business Line highlights the role of specific market participants—proprietary trading firms and high-frequency traders—in shaping liquidity around expiry during the early phase of the change.
