Mumbai: In a significant structural shift for the Indian equity markets, the Securities and Exchange Board of India (SEBI) is set to roll out new trading timings and rules starting Monday, August 3, 2026. The new framework introduces a dedicated Closing Auction Session (CAS) to determine closing prices for eligible Futures and Options (F&O) stocks, replacing the previous Volume Weighted Average Price (VWAP) method. Additionally, the F&O trading hours have been extended by ten minutes.
Under the new regulatory structure, the market will no longer observe a single, uniform closing time. For stocks within the F&O segment, continuous trading will now conclude at 3:15 PM, instead of 3:30 PM. Following this, the CAS will begin with a five minute transition period to calculate reference prices. From 3:20 PM to 3:25 PM, traders can enter fresh market or limit orders. The window from 3:25 PM until a random closure between 3:28 PM and 3:30 PM will only accept limit orders. Finally, the order matching process to finalize the official closing price will take place between 3:30 PM and 3:35 PM.
Simultaneously, the regular trading time for equity derivatives, encompassing both stock and index F&O, has been extended till 3:40 PM. The final VWAP calculation window for derivatives will also shift to operate between 3:10 PM and 3:40 PM. These changes are designed to give derivatives traders a larger window to manage expiry day volatility, adjust their trades following the cash market auction, and effectively hedge open positions.
It is important to note that cash market stocks not eligible for the F&O segment will remain unaffected by these new rules. They will continue normal trading until 3:30 PM. Additionally, SEBI has revised the pre open session schedule, which will now see order entries accepted from 9:00 AM to 9:07 AM, followed by order matching till 9:15 AM.
According to market regulators, the auction based system aims to improve price discovery accuracy by combining end of day demand and supply from all participants. This process is expected to align Indian markets closer to global best practices and assist passive funds in managing end of day trades with improved efficiency.