- Hindi News
- Business
- NSE Trading Hours Extended: 3 PM To 3:40 PM From Aug 3 | Closing Auction Rules
New Delhi23 minutes ago
- copy link
The National Stock Exchange (NSE) has decided to extend the normal market closing timing for equity derivatives i.e. Futures and Options (F&O) segment by 10 minutes.
From August 3, this market will close at 3:40 pm instead of 3:30 pm. This change was made as part of the rollout of the new Closing Auction Session (CAS) being introduced in the cash segment.
Decision to bring together cash-derivatives market
- According to the NSE circular issued on Friday, the normal market closing time for equity derivatives contracts has now been extended to 3:40 pm.
- This has been done to align the functioning of the derivatives market with the new closing auction mechanism introduced in the cash segment.
- Apart from this, there will be no change in other session timings, such as pre-open session and trade modification window, the exchange said.
What is closing auction session and how will it work
The Closing Auction Session (CAS) is a short and clear trading period at the end of the day. In this, market participants submit buy (buy) or sell (sell) orders to determine a single and fair closing price for a security.
The provisions of price bands and pre-trade risk controls related to closing auction session will also be applicable to the equity derivatives segment. The objective is to ensure continuity and smooth transition between the cash and derivatives markets during the end-of-day trading process.
Notification will be received on changes in the operating price range of stock futures.
As part of the operational changes, NSE will broadcast a notification whenever the operating price range for stock futures contracts is reset after the commencement of the closing auction session in the cash market.
As per the extant exchange rules, outstanding orders falling outside this revised price range will be automatically cancelled.
The method of closing price calculation will not change, but the time has changed.
There will be no change in the existing method of calculating closing prices of derivatives contracts, the exchange said.
However, the volume-weighted average price (VWAP) window used to determine the close price will now be calculated based on trades executed between 3:10 pm and 3:40 pm. This change reflects the revised timing of market closing.
Brokers will be able to test in mock trading sessions
NSE said that the functional changes resulting from this implementation will be made available for testing during the upcoming mock trading sessions. Brokers are advised to update the relevant contract files in their trading applications before the effective date to ensure uninterrupted functioning.
This change in market structure will improve price discovery, increase market integrity at closing and bring domestic market practice closer to international standards.
The new system will be implemented in phases under SEBI rules.
According to the SEBI circular issued on January 16, CAS will be introduced in different phases. In the initial phase, closing prices will be determined through CAS only for those stocks for which derivative contracts are available.
For all other securities in the cash segment, the closing price will continue to be calculated based on the VWAP of the last 30 minutes of the trading session, as before.
Know how the closing auction will work
The closing auction session will run from 3:15 pm to 3:35 pm on all trading days for a total of 20 minutes, the schedule of which is as follows…
3:15 to 3:20 pm: This will be the transition phase from Continuous Trading Session (CTS) to CAS. During this period, the reference price will be calculated based on the VWAP of trades taken between 3:00 pm and 3:15 pm.
3:20 to 3:25 pm: During this time both market and limit orders can be entered.
3:25 to 3:30 pm: Only limit orders will be allowed during this period. During this period, no modification or cancellation can be done in market orders. The order entry session will stop randomly anytime between 3:28 pm to 3:30 pm.
What is F&O market?
A basic definition of the derivatives market (futures and options), which explains in short words that it is contract based trading.
What is VWAP?
Volume-weighted average price (VWAP) in simple words, which shows what is the average price of a stock based on its volume and price.
Source link
[ad_3]
