BT Explainer | Sebi's new market timings kick in: What has changed and why it matters

The Securities and Exchange Board of India's (Sebi's) revised trading framework came into effect on August 3, introducing a Closing Auction Session (CAS) for F&O-eligible stocks, extending equity derivatives trading by 10 minutes and revising pre-open session timings.

What has changed from August 3?

Under the revised framework, continuous trading in F&O-eligible (Category I) stocks in the equity cash segment now ends at 3:15 pm, followed by a five-minute transition period until 3:20 pm.

The Closing Auction Session begins with CAS Order Entry I from 3:20 pm to 3:25 pm, followed by CAS Order Entry II from 3:25 pm to 3:30 pm. During the second phase, market orders cannot be modified or cancelled. Sebi has also provided for a random closure of the auction within the final two minutes of this phase.

Order matching takes place from 3:30 pm to 3:35 pm, after which the auction-discovered price becomes the official closing price for F&O-eligible stocks.

It must be noted that the revised framework does not alter trading hours for non-F&O equity cash stocks, which continue to trade until 3:30 pm.

F&O trading

Sebi has also extended equity derivatives (F&O) trading by 10 minutes. From August 3, the segment remains open until 3:40 pm instead of the earlier 3:30 pm. Timings for other market segments remain unchanged.

The pre-open session has also been revised. Order entry now runs from 9:00 am to 9:07 am, followed by order matching from 9:07 am to 9:15 am. The regular trading session continues to begin at 9:15 am.

Why has Sebi introduced the changes?

According to Sebi, the Closing Auction Session is designed to ensure a fair and transparent closing price through an auction mechanism instead of relying solely on the earlier methodology (Volume Weighted Average Price or VWAP).

The regulator expects the changes to improve trade execution, strengthen price discovery, reduce tracking errors for passive investment products such as index funds and ETFs, and bring India's market infrastructure closer to global standards.

How could the new closing auction affect trading?

Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, said the introduction of CAS changes the way liquidity is concentrated towards the end of the trading session.

"With the CAS rollout, continuous trading in F&O-linked stocks stops at 3:15 pm and the market transitions into a 20-minute closing auction that determines the official closing price within a ±3% band around a VWAP-based reference price. When large institutional orders are concentrated into this auction window, price can move quickly in the final minutes, especially if there is aggressive buying or short covering across heavyweight Nifty constituents," he said.

He said the revised closing auction pulls a larger share of end-of-day order execution into a short auction window, making the final closing price more sensitive to large order flows than under the earlier VWAP-based system.

What does the extended F&O trading mean?

Ravi Singh, Chief Research Officer at Master Capital Services, said the additional 10 minutes in the equity derivatives segment gives traders more time to manage futures and options positions before the market closes.

He said the extended trading window is expected to provide greater flexibility for adjusting hedged positions and managing end-of-day trades. However, market participants may also need to adapt their trading and risk management strategies to the revised closing schedule, particularly during expiry sessions and periods of higher market volatility.