NSE Extends F&O Trading Till 3:40 PM From August 3; Introduces Closing Auction Framework

The National Stock Exchange (NSE) has made a significant change in the working of the market by introducing the Closing Auction Session (CAS), which will lead to a ten-minute extension in the usual closing time of the market for equity derivatives. Starting from August 3, 2026, the trading session for equity derivatives will be up till 3:40 PM instead of 3:30 PM.

This step has been taken by the exchange to synchronize the derivatives market with the auction-based closing of the cash segment market.

What is the Closing Auction Session?

Closing Auction Session refers to the trading period carried out towards the end of a trading day. It involves market players placing buy or sell orders for the purpose of establishing the closing price of a security by means of an auction.

According to the SEBI circular released on January 16, the introduction of the CAS framework will take place in stages. Only those stocks having derivative trading facilities will fall under the ambit of the CAS framework. The closing price calculation for all others will remain according to the VWAP of last 30 minutes' trades.

How the Auction Process Will Function

The CAS will last for 20 minutes starting from 3:15 PM until 3:35 PM every day.

For the first five minutes of the CAS, that is from 3:15 PM until 3:20 PM, the transition period will occur, where the reference price will be determined by the VWAP of transactions made from 3:00 PM to 3:15 PM.

From 3:20 PM to 3:25 PM, participants will be able to place market and limit orders, but for the next five minutes from 3:25 PM to 3:30 PM, only limit orders will be accepted without being able to modify or cancel the market orders. The order entry session will close at random times from 3:28 PM to 3:30 PM.

Impact on Derivatives Trading

Although the CAS applies only to the cash market, NSE has extended derivatives trading hours to maintain alignment between the two segments. The exchange has also confirmed that price bands and pre-trade risk control measures introduced for CAS in the cash market will be mirrored in the derivatives segment.

NSE will additionally broadcast notifications whenever operating price ranges for stock futures are reset after the commencement of CAS. Any outstanding orders falling outside revised price limits will be automatically cancelled in accordance with exchange regulations.

Changes in Closing Price Calculation

The methodology for calculating derivative contract closing prices remains unchanged. However, the VWAP window used for determining derivative closing prices will shift from the current 3:00 PM–3:30 PM period to 3:10 PM–3:40 PM following the extension of trading hours.

Market experts note that the change marks a transition from a “continuous trading close” to an “auction-discovered close.” As a result, the final closing price of F&O-eligible stocks may differ from the last traded price visible at 3:30 PM, potentially impacting valuation, settlement, hedging and arbitrage strategies.

Apart from the revised closing time, all other market timings, including the 9:00 AM pre-open session, 9:15 AM market opening and the 4:15 PM trade modification window, will remain unchanged. Brokers have been advised to update contract files and participate in mock trading sessions before implementation.