MUMBAI: Markets regulator Sebi on Saturday proposed to make some changes to the recently introduced Closing Auction Session’s (CAS) timings and to the derivatives pricing mechanism. Launched on Aug 3, CAS had created controversy in the market with traders and investors pointing out that it increased volatility in stock prices and index values.Last week, Sebi had said that it was working on a consultation paper on CAS and derivatives pricing. The Sebi consultation paper acknowledged that there were some issues relating to pricing of derivatives contracts, especially on days those contracts were expiring.Among the proposals in Sebi’s consultation paper are two choices for arriving at the settlement price for derivatives trades. For one, use a combination of price discovered during the last 30 minutes of regular trading (also called continuous trading session with volume weighted average price or CTS VWAP) and the price discovered during CAS. The second option is to use the price discovered during the last 30 minutes of regular trading and consider CAS trades for derivatives pricing after a year.The regulator is also proposing changes to market timings. After regular trading ends, there will be a one-minute transition break after which trading will shift to CAS for nine minutes. After that there would be five-minute additional derivatives trading window.Here under the first option regular trading would continue till 3.30pm. After that there would be CAS and derivatives trading till 3.45pm. Second option is to end regular trading at 3.15pm, followed by CAS and derivatives trading till 3.30pm.The consultation paper also proposed that the reference price for CAS will continue to be based on the last 15-minute VWAP of continuous trading. It also said that CAS price band would remain at ±3%. It also said orders that are within the ±1% band can be cancelled. On the other hand, orders between ±1% and ±3% cannot be cancelled and can only be modified to improve the price, it said.The paper proposed that indicative index value will not be disseminated during CAS.Sebi has asked for comments on the paper till Oct 3.