SEBI Overhauls Closing Auction and Derivatives Settlement Norms

The Securities and Exchange Board of India announced a comprehensive overhaul of the Closing Auction Session (CAS) framework for the equity cash segment and revised settlement norms for derivatives contracts. The regulator is restoring a settlement method for futures and options that utilizes the final 30 minutes of trading on expiry days, effectively delinking derivatives settlement from the new closing auction.

Under the new framework, settlement prices for stock and index derivatives will be determined by the volume-weighted average price (VWAP) during that final 30-minute window. For the equity cash segment, the regulator established a dedicated 10-minute auction window from 3:30 p.m. to 3:40 p.m. on all trading days. To prevent manipulation, the order entry session will close randomly between 3:38 p.m. and 3:40 p.m. via a system-driven process.

Reference prices for the CAS will be based on the VWAP of trades from the final 15 minutes of the Continuous Trading Session. Most of these regulatory modifications are scheduled to take effect on December 7, 2026, while specific rules regarding the transition of unexecuted orders will begin on February 8, 2027.