Mumbai, August 3: The Securities and Exchange Board of India (SEBI) has announced significant changes to the trading hours for derivatives, effective Monday. Investors will notice a new structure in the futures and options (F&O) segment of the stock market.
The market regulator aims to enhance price discovery, improve market efficiency, and align India’s market structure with global standards through this revised trading framework.
A key feature of the new structure is the introduction of a Closing Auction Session (CAS) for F&O stocks in the equity cash segment. This initiative is designed to ensure fair and transparent determination of closing prices through an auction mechanism, while also improving liquidity and execution efficiency.
Under the new schedule, regular trading for F&O stocks will continue until 3:15 PM. This will be followed by a transition period lasting until 3:20 PM. The Closing Auction Session will then commence from 3:20 PM to 3:25 PM, starting with the first order entry phase. A second order entry phase will follow from 3:25 PM to 3:30 PM, during which investors will not be allowed to modify or cancel market orders. The auction will conclude within the last two minutes of this phase.
Order matching will occur between 3:30 PM and 3:35 PM, after which the auction price will be determined. The price discovered through the Closing Auction Session will serve as the official closing price for all F&O stocks.
SEBI has clarified that trading hours for non-F&O equity cash stocks will remain unchanged, with the market closing at 3:30 PM. Additionally, trading hours in the equity derivatives segment have been extended by 10 minutes. The F&O segment will now operate until 3:40 PM, while the timings for all other market segments will remain the same.
Another important change pertains to the pre-open session. Under the revised framework, the order entry window will be open from 9:00 AM to 9:07 AM, followed by order matching from 9:07 AM to 9:15 AM. The regular trading session will commence at 9:15 AM.
According to SEBI, the new Closing Auction Session is expected to enhance the quality of closing prices by aggregating liquidity through an auction-based process. The regulator stated that this framework will provide equal access to all investors, reduce tracking errors for passive investment funds, and bring India’s equity market closer to global standards.
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