NSE to Overhaul Closing Auction Session and Extend F&O Trading Hours to 3:45 PM from December 7

The National Stock Exchange of India (NSE) announced a comprehensive overhaul of the Closing Auction Session (CAS) in the equity cash segment and revised trading modalities for the equity derivatives segment, effective December 7, 2026.

The revamp follows regulatory directives issued by the Securities and Exchange Board of India (SEBI) on October 15, which addressed market feedback regarding sharp indicative index fluctuations and abnormal volatility in expiring options during post-3:30 PM auction windows.

Key Changes to the Closing Auction Session

Under the revised structure, the duration of the CAS will be condensed to a single 10-minute window running from 3:30 PM to 3:40 PM on all trading days. The session will apply to securities that have derivative contracts available across exchanges, with exceptions such as the ex-date of a scheme of arrangement:

• 3:30 PM to 3:31 PM: Reference price calculation and transition from the Continuous Trading Session to CAS.
• 3:31 PM to 3:36 PM: Order entry window allowing entry, modification, and cancellation of both market and limit orders.
• 3:36 PM to 3:40 PM: Order entry window restricted strictly to limit orders. Market orders cannot be modified or cancelled during this stage, and order entry will close randomly between 3:38 PM and 3:40 PM.
• 3:40 PM to 3:45 PM: Order matching and trade confirmation.
• 3:45 PM to 3:50 PM: Buffer and transition period.
• 3:50 PM to 4:00 PM: Post-close session conducted at the established closing price.

The reference price for eligible securities will be calculated using the volume-weighted average price (VWAP) of continuous trading executed between 3:15 PM and 3:30 PM. If no trade occurs, the last traded price (LTP) of the day will apply. Price bands during the CAS will be strictly capped at plus or minus 3% of the reference price.

Extended Derivatives Trading Hours

Trading hours across the equity derivatives segment will be officially stretched by 15 minutes:

• Stock Derivatives: Trading will continue until 3:45 PM on all trading days, including contract expiry days.
• Index Derivatives: Contracts will trade until 3:45 PM on regular trading days. However, on expiry days, contracts that expire on that specific day will cease trading at 3:30 PM, whereas non-expiring index contracts will continue trading until 3:45 PM.
• Trade Modification: The window for modifying trades across both stock and index derivatives will remain open until 4:15 PM.
• Futures Price Bands: Between 3:30 PM and 3:45 PM, price bands for stock and index futures will be reset to plus or minus 3% of their respective reference prices, which will be based on the VWAP between 3:15 PM and 3:30 PM.

Decoupling Expiry Settlement from Closing Auctions

In one of the most critical adjustments for Indian retail and institutional derivatives participants, SEBI and the NSE have unlinked the final expiry settlement price from the closing auction price.

Expiring index derivatives will now settle against the underlying index value computed using the VWAP of its constituent stocks over the final 30 minutes of continuous cash trading (3:00 PM to 3:30 PM). Similarly, expiring single-stock derivatives will settle using the 3:00 PM to 3:30 PM VWAP across all exchanges.

The decoupling eliminates late-session auction swings from directly impacting final payoffs for option sellers and futures positions on expiry afternoons.

The NSE also noted that while the majority of these measures take effect on December 7, 2026, the framework governing the automatic carry-over of unexecuted limit and disclosed quantity orders from continuous trading into CAS will go live separately on February 8, 2027. Mock trading sessions will be conducted prior to rollout to help brokers and algorithmic desks transition smoothly.