New Delhi, Aug. 6 -- Stock markets globally have multiple layers of stakeholders, all of them invested in signals transmitted by trading patterns. The constituents directly concerned with price movements of individual stocks and their impact on various indices are actual investors-both institutional and retail-as well as the two-layered regulatory structure comprising exchange management and the jurisdiction's market regulator.

A recent move by the Securities and Exchange Board of India (Sebi) to improve how the Indian market functions has resulted in avoidable volatility; this week's spasms may be short-lived, but could extract long-term costs.

A Sebi-directed change in how each day's closing prices of cash-market stocks are calculated...