India's Sebi Introduces Closing Auction Session and Extends Equity Derivatives Trading Hours

Final minutes of the trading day are set to change from Monday, August 3, as the Securities and Exchange Board of India (Sebi) is introducing a new Closing Auction Session for F&O-eligible stocks and extending trading hours for the equity derivatives segment. The new framework brings a different end-of-day routine for traders, especially those in F&O-eligible stocks and the equity derivatives segment. Here's a look at what will change starting this week.

Under the revised trading framework, biggest change will be seen in the closing process for F&O-eligible (Category I) stocks. Instead of ending with the regular trading session alone, these stocks will now move into a dedicated auction process after 3:15pm, with the auction-discovered price becoming their official closing price. Regular trading for F&O-eligible stocks will end at 3:15pm, followed by a five-minute transition period until 3:20pm. The Closing Auction Session will then begin with CAS Order Entry I from 3:20pm to 3:25pm and CAS Order Entry II from 3:25pm to 3:30pm. During the second order entry window, market orders cannot be modified or cancelled. At the same time, the session will also close randomly within its final two minutes. Order matching will be carried out between 3:30pm and 3:35pm, after which the closing auction price will be determined. This price will be treated as the official closing price for all F&O-eligible stocks.

The changes do not affect all stocks. Non-F&O equity cash stocks will continue to trade until 3:30pm, with no change in their existing market hours. Sebi has also extended trading in the equity derivatives (F&O) segment by 10 minutes. From August 3, trading in this segment will continue until 3:40pm, while operating hours for other market segments will remain unchanged.

The regulator has also revised the pre-opening session. Under the new schedule, order entry will take place from 9:00 am to 9:07 am, followed by order matching between 9:07am and 9:15am. The regular trading session will continue to start at 9:15 am.

According to Sebi, the Closing Auction Session is intended to ensure a fair and transparent closing price through an auction mechanism. It said the framework is designed to improve execution efficiency by aggregating liquidity, provide equal access to all investors, reduce tracking errors for passive funds, and align India's market structure with global best practices.