SEBI has introduced a Closing Auction Session (CAS) for F&O stocks from August 3, 2026, changing how closing prices are determined. F&O cash market trading will end at 3:15 PM, followed by a closing auction until 3:35 PM, while equity derivatives trading will be extended to 3:40 PM. The changes aim to improve price discovery, reduce price manipulation, and align India's market structure with global practices.
The Indian equity market is set to see significant structural changes from August 3, 2026, onwards owing to the introduction of the Closing Auction Session (CAS) for Futures & Options (F&O)-eligible stocks by the Securities and Exchange Board of India (SEBI). The restructuring process would lead to a fundamental shift in the manner in which closing prices would be calculated as well as expansion of equity derivatives trading session time along with other variations of the closing procedure across segments.
This initiative seeks to bring about increased transparency in the Indian market structure in line with international market structures.
New Closing Auction Session For F&O Stocks
As per the new scheme, the F&O eligible stocks belonging to the equity cash segment will be subject to a different closing process. Regular trading on such stocks will continue till 3:15 PM, and thereafter, there will be a gap of 3:15 PM to 3:20 PM.
The session of Closing Auction will start from 3:20 PM. Orders will be accepted from 3:20 PM to 3:25 PM when market and limit orders may be placed by the investors. The next phase, from 3:25 PM to 3:30 PM, will enable placing of limit orders but no modification or cancellation of market orders.
Orders entry will close randomly during the last two minutes to avoid manipulation of the orders by the traders. Order matching will be done from 3:30 PM to 3:35 PM, and the closing price of the stock will be decided by the auction process.
Learn More About CAS and new F&O timings Here.
Three Different Market Closing Times From August 3
With the adoption of CAS, Indian stock markets will not have any single closing time anymore.
Non-F&O stocks will continue their usual hours until 3:30 PM without any changes.
Continuous trading of F&O eligible stocks in the cash market will be completed at 3:15 PM and then will go through the Closing Auction Session until 3:35 PM.
Equity Derivatives segment will have 10 extra minutes of trading with an extended period of F&O trading until 3:40 PM.
The post-close segment will take place between 3:50 PM and 4:00 PM.
F&O Trading Extended By 10 Minutes
Trading hours for equity derivatives would be extended to 3:40 PM, with the objective of ensuring that the derivatives market is synchronized with the new cash market close.
This extended trading period would allow market participants to manage their exposures, re-adjust hedges and respond to the results of closing auctions.
The VWAP calculation period for derivatives would also be changed. This period would now be from 3:10 PM to 3:40 PM as opposed to the earlier 30 minute period ending at 3:30 PM.
Why Is SEBI Introducing Closing Auction Session?
Previously, the close of prices for equities was done based on the volume weighted average price of the deals done during the last 30 minutes of the trading day.
Now, with the introduction of the auction system, the buy and sell requests will be aggregated into one equilibrium price. The resultant equilibrium price will act as the close of the prices for F&O scrips.
SEBI is hopeful that the new arrangement will lead to better price discovery, level playing field to all investors and lesser tracking errors in case of passive funds.
Pre-Open Session Timings Also Revised
SEBI has made changes to pre-opening time as well. Orders can now be entered between 9:00 AM and 9:07 AM, and orders matching takes place between 9:07 AM and 9:15 AM. Trading of the normal market will start at 9:15 AM.
Why Stocks May React After The New System
The implementation of the CAS itself is a form of change in market structure and is unrelated to the fundamental factors of any company. Stocks that have high institutional holdings and active F&O trading could experience a change in behavior of closing prices due to the new auction process.
The implementation of this new system could lessen price distortion during the closing period by improving the matching of supply and demand. However, investors might experience increased volatility during the closing period as they adjust to the new system.
