India's new method of setting official closing prices for its stocks is drawing complaints from high frequency traders, according to reports. The traders are complaining about a short-selling hurdle introduced in the new system, which is causing them to shun the closing auction. This could have a significant impact on the Indian market, particularly since high frequency traders play a crucial role in keeping the $5.2 trillion market humming.
According to analysts, this could affect market efficiency and lead to a rise in trading costs. India's Securities and Exchange Board (SEBI) introduced the new method to bring more transparency to the market. However, it appears that the new system is having some unintended consequences, which are being felt by high frequency traders and market participants.