Investors and traders will have to adapt to revised stock market timings from Monday, August 3, as the Securities and Exchange Board of India (SEBI) implements a new trading framework aimed at improving price discovery, enhancing market efficiency, and aligning India's capital markets with global best practices.
The most significant change under the revised framework is the introduction of a Closing Auction Session (CAS) for Futures and Options (F&O)-eligible or Category I stocks in the equity cash segment. In addition, trading hours in the equity derivatives segment will be extended by 10 minutes, allowing F&O trading to continue until 3:40 pm.
According to SEBI, the new mechanism has been designed to create a more transparent and efficient process for determining the official closing prices of actively traded stocks. The regulator believes that a structured closing auction will improve liquidity, minimise price manipulation near the close of trading, and ensure that the closing price reflects genuine market demand and supply.
Under the revised schedule, the regular trading session for F&O-eligible stocks in the equity cash market will continue until 3:15 pm, as before. However, instead of the market closing immediately, a transition period will follow from 3:15 pm to 3:20 pm, during which participants can prepare for the auction process.
The Closing Auction Session will then begin with CAS Order Entry I from 3:20 pm to 3:25 pm, allowing market participants to place, modify, or cancel their orders. This will be followed by CAS Order Entry II from 3:25 pm to 3:30 pm. During this second phase, investors will still be able to enter new orders, but modifications or cancellations of market orders will not be permitted.
To prevent attempts at manipulating prices in the final moments of trading, the session will conclude at a randomly selected time within the last two minutes of the order entry period.
Following the order entry stages, Order Matching will take place between 3:30 pm and 3:35 pm, when buy and sell orders will be matched to determine the final auction price. The price discovered through this auction mechanism will become the official closing price for all F&O-eligible stocks.
SEBI expects this process to produce a more accurate and transparent closing price, which is widely used for settlement purposes, valuation of investment portfolios, index calculations, and derivatives pricing.
While the changes apply to F&O-eligible stocks, trading hours for non-F&O stocks in the equity cash segment will remain unchanged, with these securities continuing to close at 3:30 pm as per the existing schedule.
The regulator has also announced an extension in the equity derivatives (F&O) trading session, which will now continue until 3:40 pm, 10 minutes longer than the previous closing time. The extension is intended to provide market participants with additional time to adjust their derivatives positions after the closing auction determines the final cash market prices.
Trading hours for other market segments, including currencies, commodities, and debt markets, will remain unchanged unless notified separately.
Also read: RBI’s support limits rupee's decline despite oil price surge
In addition to the changes at the close of the trading day, SEBI has revised the pre-open market session. Under the new framework, the order entry window will now remain open from 9:00 am to 9:07 am, while order matching will be conducted between 9:07 am and 9:15 am. The regular trading session for the equity market will continue to commence at 9:15 am.
The regulator said these modifications are aimed at strengthening market integrity and improving the efficiency of price discovery during both the opening and closing phases of trading.
According to SEBI, the Closing Auction Session offers several advantages. It is expected to ensure a fair and transparent closing price through an auction-based mechanism, improve trade execution by aggregating market liquidity at the end of the session, provide equal participation opportunities to all categories of investors, reduce tracking errors for passive investment vehicles such as index funds and exchange-traded funds (ETFs), and bring India's market structure closer to internationally accepted trading practices.
Market participants, including brokers, institutional investors, mutual funds, and retail traders, are expected to closely monitor the implementation of the new framework in the coming days. Analysts believe the revised trading structure could enhance overall market efficiency while making India's equity markets more robust and globally competitive over the long term.
Follow us
