SEBI Closing Auction Session Review: 20,000 Comments In, Circular “Soon”; the Two Market Timing Options Explained

SEBI’s public consultation on the closing auction session, stock market timings and expiry-day settlement of derivatives closed on 3 October 2026 with 20,000 comments received by 7 PM, the regulator said in a post on X. Chairman Tuhin Kanta Pandey said the same day that SEBI would “quickly look at all these comments and go ahead”, and answered “Yes, it will be” when asked whether a circular would follow soon.

The consultation paper, issued on 12 September, proposes two things: a new way to calculate the settlement price of index and stock derivatives on expiry day, and a choice between two sets of closing-time timings for the cash and F&O markets. Nothing has changed yet. The current timings stay in place until SEBI issues a circular.

What the closing auction session is

The closing auction session (CAS) started on 3 August 2026 for stocks that have derivatives contracts, which SEBI’s paper calls F&O stocks. Before that, a stock’s closing price was the volume-weighted average price (VWAP) of trades in the last 30 minutes of normal trading. Under CAS, buy and sell orders are collected for a few minutes after normal trading stops, and the exchange fixes the closing price at the level where the most shares can change hands.

For these stocks, normal (continuous) trading now ends at 3:15 PM. The auction runs from 3:15 PM to 3:30 PM, including a five-minute transition, and F&O trading continues until 3:40 PM. Stocks without derivatives still trade until 3:30 PM as before.

SEBI’s paper says the first weeks of CAS raised a problem on expiry days. Derivatives kept trading while the underlying stocks were in the auction, and traders could react to the auction’s “evolving prices”. Its data for NSE shows average premium turnover of ₹189.82 crore a minute during the 3:20–3:30 PM auction window on expiry days, higher than the ₹150.14 crore a minute between 2:45 PM and 3:15 PM.

Two proposed market timings after 3 PM

SEBI asked the public to choose between two options. Both keep the auction to about 10 minutes and cut the transition from five minutes to one.

Option A brings back the 3:30 PM close for every stock and lets F&O run five minutes past the auction, until 3:45 PM. Option B keeps the 3:15 PM cut-off for F&O stocks but pulls the end of derivatives trading back to 3:30 PM, so the whole market closes together.

How the settlement price could change

The bigger change for F&O traders is the expiry-day settlement price. At present, an index contract settles on the index’s closing value, which is built from the auction prices of its constituent stocks. SEBI proposed two alternatives:

• Blended VWAP: settle on the volume-weighted price of trades in the last 30 minutes of continuous trading plus the 10-minute auction, with each part counted in proportion to its actual traded value. SEBI’s worked example has the auction contributing 10% because it accounted for 10% of the traded value.
• CTS VWAP first: go back to the VWAP of the last 30 minutes of continuous trading alone, and move to the blended method later.

Business Standard reported on 4 October that traders and market bodies mostly backed the second route. It said the Futures Industry Association, a global trade body, “strongly disagreed” with an immediate move to blended VWAP and asked for a liquidity trigger before any shift.

The paper also asks whether exchanges should stop showing an indicative index value during the auction while continuing to show indicative prices for individual stocks.

Who will notice the difference?

Long-term investors who buy shares or mutual funds will barely see this. A SIP instalment or delivery purchase gets the day’s price whichever option SEBI picks. The people affected are those trading F&O on expiry days, and anyone placing orders after 3 PM. Under Option B, an F&O position could no longer be closed after 3:30 PM. Under Option A, normal trading in all stocks would again run until 3:30 PM.

The closing price also matters beyond trading. It is used for the day’s NAV of equity mutual funds and for index values reported in the evening. Our Sensex report for 1 October uses those closing levels. SEBI’s other recent change for retail investors, the awareness messages on broker apps, starts on 1 November.

What we don’t know yet

The market holiday list stays the same for now, and the next step on the closing auction session is SEBI’s circular. That circular will settle both the closing time and the expiry-day price.

FAQs

Has the stock market closing time changed?

Not yet. Since 3 August 2026, F&O stocks stop continuous trading at 3:15 PM, other stocks at 3:30 PM, and F&O trading ends at 3:40 PM. SEBI’s proposals change these only after a circular.

Can I still send comments to SEBI?

The consultation paper set 3 October 2026 as the last date for comments, so the window has closed.

Does the closing auction affect my mutual fund?

Equity funds value their holdings at closing prices, so the method feeds into NAV. SEBI has not suggested any change to how mutual fund NAVs are calculated.

Disclaimer: This article explains a SEBI consultation paper and published reports as of 4 October 2026. The timings described are proposals, not final rules, and nothing here is trading advice.