National Stock Exchange (NSE) has announced key changes to trading modalities in the equity derivatives segment as it prepares to implement the Closing Auction Session (CAS) framework in the cash market from August 3, 2026.
Under the revised framework, trading in equity derivatives, including both stock and index futures and options, will continue until 3:40 PM instead of the current 3:30 PM. The exchange said the change is aimed at aligning the derivatives market with the new closing auction process being introduced in the cash segment.
According to the circular issued on May 29, the normal market opening time for the derivatives segment will remain unchanged at 9:15 AM, while the market close time will be extended by 10 minutes to 3:40 PM. The trade modification cut-off will continue to remain at 4:15 PM.
The Closing Auction Session will initially be applicable to cash market securities that have derivatives contracts. During this process, closing prices of eligible stocks will be determined through an auction mechanism rather than the existing volume-weighted average price methodology used in the final 30 minutes of trading.
To ensure consistency between the cash and derivatives segments, NSE said the operating price range for stock futures contracts will be revised before the commencement of the closing auction. The exchange will reset price bands for stock futures based on a reference price calculated after 3:15 PM.
The exchange has also clarified that all outstanding futures orders outside the revised price band will be automatically cancelled. Traders will receive exchange notifications when the operating price range is revised.
For stock futures, the applicable price band during the auction period will be fixed at plus or minus 3% of the reference price. Unlike the existing framework, dynamic price band flexing will not be available between 3:15 PM and 3:40 PM.
The FAQ document released by NSE further explains that while the Closing Auction Session applies only to the cash market, derivatives contracts will remain open until 3:40 PM to facilitate smooth price discovery and settlement alignment. The exchange noted that the closing price calculation methodology for derivatives contracts will remain unchanged and will continue to be based on the volume-weighted average price of trades executed during the final half hour of trading, which will now run from 3:10 PM to 3:40 PM.
NSE said members should prepare their systems for the operational changes ahead of the August rollout. The exchange also plans to conduct multiple mock trading sessions before implementation to allow brokers and market participants to test their systems and workflows.
The new framework forms part of broader market structure reforms aimed at improving closing price discovery and enhancing the efficiency of end-of-day trading and settlement processes in Indian capital markets.