SEBI revises closing auction timings and expiry-day settlement for derivatives

The Securities and Exchange Board of India (SEBI) has revised the Closing Auction Session (CAS), the end-of-day auction that sets closing prices of shares, along with market timings and the settlement method for derivatives. The circular is dated 15 October 2026. Most changes apply from 7 December 2026, and rules on carried-over orders from 8 February 2027.

What Happened

According to the circular, SEBI introduced CAS in the equity cash segment through a circular dated 16 January 2026. SEBI then issued a consultation paper on 12 September 2026 before deciding on the changes.

Per the circular, CAS will run as a separate 10-minute session from 3:30 pm to 3:40 pm on all trading days. From 3:31 pm, both limit and market orders can be placed for five minutes. From 3:36 pm, only limit orders can be placed, and market orders cannot be modified or cancelled. Order entry will close at a random, system-driven moment between 3:38 pm and 3:40 pm.

SEBI said index and stock derivatives will trade until 3:45 pm, except that expiring index derivatives will stop at 3:30 pm on expiry day. A post-close session, where trades happen at the closing price, will run from 3:50 pm to 4:00 pm.

Only limit and market orders will be allowed in CAS. New iceberg orders, which show only part of their quantity, and stop-loss orders will not be allowed. Unexecuted iceberg orders will move into CAS as fully disclosed limit orders unless the trader opts out.

On expiry day, the settlement price of index derivatives will be based on the index value using volume-weighted average prices (VWAP) of its constituent shares in the last 30 minutes of normal trading. Stock derivatives will settle on the VWAP of the underlying share in that window across all exchanges.

What It Means

Investors and traders who place orders near market close will see new timings from 7 December 2026. Those trading futures and options should note that expiry-day settlement prices will be based on the last 30 minutes of trading rather than on CAS closing prices. Traders using iceberg orders can choose, when placing the order, not to have it carried into the auction once those rules apply from 8 February 2027.

Source: SEBI circular