Folks, SEBI is changing the way closing prices are discovered for F&O stocks from 3rd August based on this circular.
Until now, our markets had a ‘Continuous Trading Session (CTS)’, and the closing price of stocks and indices was based on the final 30 mins VWAP. With the new ‘Closing Auction Session (CAS)’, all buy and sell orders will be pooled together and matched at one equilibrium price between 3:15 and 3:35 PM.
It’s a big change, and it matters because it’ll make it harder for sharks to influence the closing price with a few big trades in the last few minutes, because price discovery is based on aggregated demand and supply, not just a mathematical VWAP formula.
The equity segment moves to CAS from 3:15–3:35 PM, while F&O continues till 3:40 PM. Intraday trades will also need to be squared off before these timings. Long-term investors don’t need to change anything, but active traders will need to adapt.
While all this may seem inconvenient and complicated, it’s a move toward established global practices. So, overall, I think this is a sensible step by SEBI toward better price discovery for everyone, from retail traders to passive/ETFs and active funds. For more information, read our Risk Management Policy Update. If you have any doubts or further questions regarding this, do reach out in the comments. Will try to respond ASAP.
