The Securities and Exchange Board of India (SEBI) has floated seven key proposals in a consultation paper aimed at strengthening liquidity, transparency and price discovery during the closing auction session (CAS).
Public comments have been invited till Oct. 3, 2026.
Derivatives Settlement Price
SEBI has proposed two options for computing the settlement price of derivatives contracts.
Under Option 1, the price would be derived using a combination of continuous trading session (CTS) and CAS trades. Option 2 proposes continuing with CTS-only settlement for at least a year, after which CAS-based inputs may be added.
No Indicative Index Value During CAS
The regulator has proposed doing away with the indicative index value currently shown during the CAS, which is based on the indicative equilibrium price (IEP).
Revised Market Timings
Two alternative timing structures have been proposed. Option A would have CAS-eligible stocks trade till 3:30 pm, with the CAS running from 3:31 pm to 3:40 p.m., followed by F&O trading till 3:45 p.m.. Option B proposes stock trading ending at 3:15 p.m., the CAS running from 3:15 p.m. to 3:25 p.m., and F&O trading concluding at 3:30 p.m.
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Shorter CAS Transition Time
SEBI has proposed cutting the CAS transition time from the current five minutes to just one minute.
Reduced Post-CAS F&O Window
The post-CAS F&O trading window is proposed to be shortened from 10 minutes to five minutes.
Restrictions On Limit Order Cancellations
Proposal for limit orders placed beyond a band of plus or minus 1% of the reference price would not be permitted to be cancelled once submitted during the CAS. Such orders, SEBI said, could only be modified to improve their price.
Iceberg Orders To Convert Into Limit Orders
Unexecuted iceberg orders would be allowed to move into the CAS as regular, fully disclosed limit orders.
SEBI said the proposed framework is intended to improve liquidity, transparency and price discovery in the closing auction session, which determines the reference closing price for listed securities and, by extension, derivatives settlement.
The regulator is expected to finalise the changes after reviewing stakeholder feedback.
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