The National Stock Exchange has extended trading timings in the equity derivatives segment to 3:40 pm. This change, which will be implemented from August 3, has been made to promote better price discovery and market transparency under the closing auction session.
New Delhi: There is going to be a big change for investors doing derivatives trading in the stock market. The National Stock Exchange (NSE) has announced that from August 3, the market closing time in the equity derivatives i.e. F&O segment will be increased by 10 minutes to 3:40 pm. This step is part of the process of implementing Closing Auction Session (CAS).
F&O trading now till 3:40 pm
The National Stock Exchange has decided to extend trading hours in the equity derivatives market. Currently trading in the F&O segment takes place till 3:30 pm, but from August 3, 2026, this time will be increased to 3:40 pm.
According to the exchange, this change has been made to better coordinate with the closing auction session being implemented in the cash market. This will make pricing between the cash market and the derivatives market more effective and balanced.
What is closing auction session?
The closing auction session (CAS) is a special trading phase before the market closes. During this period, investors participate in determining the fair closing price of a stock by placing buy and sell orders.
Market experts believe that this arrangement helps in reducing last-minute price fluctuations, improving price discovery and increasing transparency in the market. This system is already implemented in many developed stock markets of the world.
New provisions for price band and risk control
NSE has said that some new price bands and pre-trade risk control rules will also be implemented along with the closing auction session. If the operating price range of a stock futures contract is redefined during the auction process, the exchange will release the information immediately.
All pending orders outside the revised price range will be automatically canceled. Its objective is to control abnormal fluctuations and risk in the market.
Method to calculate closing price
The Exchange has clarified that there has been no change in the basic methodology of determining the closing price of derivatives contracts. However, the time period used to calculate the Volume Weighted Average Price (VWAP) has been modified.
Now data from deals executed between 3:10 pm and 3:40 pm will be used to determine the closing price. This will allow the final price to more accurately reflect the actual demand and supply of the market.
This is how the closing auction will run
The closing auction session will be implemented in a phased manner as per SEBI guidelines.
- The transition phase will be from 3:15 pm to 3:20 pm.
- Both market and limit orders will be accepted from 3:20 pm to 3:25 pm.
- Only limit orders can be placed from 3:25 pm to 3:30 pm.
- The order entry window may close at random any time between 3:28 pm and 3:30 pm.
During this period, market orders will not be allowed to be modified or cancelled.
What will be the impact on investors and brokers?
According to experts, this change will increase the efficiency and transparency of the market. Large institutional investors may benefit from better pricing, while retail investors are also likely to get a fairer closing price.
NSE has advised all brokers and trading members to update their trading platforms and contract files before August 3. The exchange will also test these changes through mock trading sessions to ensure that there are no technical glitches in implementing the new system.
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