New Delhi, Sept. 14 -- The Securities and Exchange Board of India (Sebi) on Saturday proposed changes to how derivative contracts are settled on expiry days, and operational rules for the closing auction session (CAS) after a rocky start to the month-old system.

The framework for F&O stocks, introduced on 3 August, had led to unexpected price swings and market uncertainty, prompting the market regulator to propose tweaks.

Mint explains the latest proposals and what they mean for the markets.

What changes has Sebi proposed to F&O settlement?

The market regulator has proposed two options for determining the settlement price of index and single-stock derivatives on expiry days.

The first is a Blended VWAP (Volume Weighted Average Price)...