SEBI Introduces Closing Auction For F&O Stocks; New Trading Timings Explained

Investors will see the Securities and Exchange Board of India’s (SEBI) new trading timings come into effect from Monday, 3 August, as the regulator introduces a revised framework for equity and derivatives markets.

The biggest change is the launch of a Closing Auction Session (CAS) for F&O-eligible stocks, along with extended trading hours for equity derivatives and revised pre-open market timings.

The changes do not affect all stocks equally. While non-F&O shares will continue trading until 3:30 PM, F&O-eligible stocks will stop continuous trading at 3:15 PM before moving into a closing auction. Meanwhile, equity derivatives will now remain open until 3:40 PM, giving traders an additional 10 minutes after the cash-market auction.

What Changes For F&O Stocks Under The Closing Auction Session?

Under the new system, regular trading in F&O-eligible stocks will end at 3:15 PM. After a five-minute transition period, the Closing Auction Session will begin at 3:20 PM with its first order-entry window, which will remain open until 3:25 PM.

A second order-entry phase will run from 3:25 PM to 3:30 PM, during which only limit orders can be placed, while market orders cannot be modified or cancelled. The auction will close randomly within the final two minutes before order matching takes place between 3:30 PM and 3:35 PM.

The auction price discovered through this process will become the official closing price for F&O stocks. SEBI said the new mechanism is designed to improve price discovery, increase market efficiency, and ensure fair participation by bringing together buy and sell orders at a single point.

Why Has SEBI Introduced The Closing Auction?

SEBI said the new auction process is designed to make closing prices more transparent by bringing together buy and sell orders at the end of the trading day. The regulator expects it to improve trade execution, reduce tracking errors for passive funds, and bring India's markets closer to global standards.

Apart from the closing auction, SEBI has also revised the pre-open market session. Investors can now place orders between 9:00 AM and 9:07 AM, while order matching will take place from 9:07 AM to 9:15 AM. Regular market trading will continue to begin at 9:15 AM.

The biggest change for investors is that different parts of the market will now wrap up at different times. Non-F&O stocks will trade until 3:30 PM as before, F&O-eligible stocks will move into a closing auction after 3:15 PM, and stock and index derivatives will remain open until 3:40 PM.

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