Mumbai, July 28 -- Zerodha founder and CEO Nithin Kamath has said the new Closing Auction Session (CAS) mechanism could reduce the brokerage firm's revenue by around 1-5 per cent, while also creating an operational challenge as different segments of the market will now close at different times.

Indian stock exchanges will introduce a new CAS mechanism for stocks with futures and options (F&O) contracts from August 3, replacing the existing mechanism for determining closing prices in a move aimed at improving price discovery and making end-of-day price manipulation more difficult.

According to Kamath, the closing price of a stock is currently calculated based on the volume-weighted average price (VWAP) of trades during the last 30 minute...