SEBI Introduces New Trading Framework & Closing Auction

The Securities and Exchange Board of India (SEBI) will implement a new trading framework starting on Monday, August 3, 2026. This significant overhaul aims to improve price discovery, boost market efficiency, and align India’s capital markets with international standards.

A core element of this revised framework is the introduction of a Closing Auction Session (CAS) for Futures and Options (F&O)-eligible, or Category I, stocks within the equity cash segment. Additionally, the trading hours for the equity derivatives segment will see an extension, allowing F&O trading to continue for an extra 10 minutes.

Understanding the New Trading Schedule

SEBI states that this new mechanism is designed to create a more transparent and efficient process for determining the official closing prices of actively traded stocks. The regulator anticipates that a structured closing auction will boost liquidity and reduce price manipulation towards the end of trading.

• The regular trading session for F&O-eligible stocks in the equity cash market will conclude at 3:15 pm.
• A transition period will follow from 3:15 pm to 3:20 pm, allowing market participants to prepare for the auction.
• The Closing Auction Session will commence with CAS Order Entry I from 3:20 pm to 3:25 pm, during which orders can be placed, modified, or cancelled.
• CAS Order Entry II will run from 3:25 pm to 3:30 pm, permitting new orders but restricting modifications or cancellations of market orders.
• To counteract price manipulation, the session will conclude at a randomly chosen time within the last two minutes of the order entry period.
• Order Matching will occur between 3:30 pm and 3:35 pm to determine the final auction price, which will serve as the official closing price for all F&O-eligible stocks.

While these changes specifically target F&O-eligible stocks, trading hours for non-F&O stocks in the equity cash segment will remain unchanged, closing at 3:30 pm. The extension of the equity derivatives (F&O) trading session to 3:40 pm is intended to provide market participants with additional time to adjust their derivatives positions after the cash market closing auction.

Revised Pre-Open Market Session

The pre-open market session has also been revised to further enhance market integrity and price discovery during the opening phase. These adjustments ensure a more robust start to the trading day.

• The order entry window for the pre-open market will now be open from 9:00 am to 9:07 am.
• Order matching will be conducted between 9:07 am and 9:15 am.
• The regular equity market trading session will continue to begin at 9:15 am, as per the existing schedule.

SEBI emphasizes that these comprehensive modifications aim to strengthen market integrity and significantly improve the efficiency of price discovery during both the opening and closing phases of trading. The Closing Auction Session is specifically expected to ensure fair and transparent closing prices, improve trade execution, and provide equal participation opportunities for all market participants.