- SEBI updated market hours, auction rules, and F&O settlements effective Dec 7, 2026.
- Expiring F&O contracts will settle via 3:00-3:30 PM cash VWAP instead of CAS prices.
- Index options trade until 3:45 PM, but expiring contracts close 15 minutes early.
SEBI’s revised rules will largely take effect on December 7, 2026, while provisions governing the transition of unexecuted limit and iceberg orders into the closing auction will apply from February 8, 2027.
The updates were introduced to address growing concerns over sharp price swings on options expiration days and how final closing auction prices impact traders’ settlements.
Under the new rules, normal trading in all cash market stocks runs until 3:30 PM IST (Indian Standard Time), including those covered by CAS. After that, the closing auction lasts 10 minutes, from 3:30 to 3:40 PM, instead of the old 20-minute window.
Indian traders should know that from 3:31 to 3:36 PM, they can place market and limit orders, and after that, only new limit orders are allowed. The order window then closes at a random moment between 3:38 and 3:40 PM, and order matching happens right after.
Big Change in Settlement Prices
For Indian derivatives traders, the biggest update involves how final contract payouts are calculated.
Rather than using CAS closing prices, expiring stock and index F&O contracts will settle based on the volume-weighted average price (VWAP) of the underlying stock or index over the last 30 minutes of regular cash market trading, from 3:00 to 3:30 PM.
For index options and futures, the final price is calculated by combining the average prices of all the individual stocks that make up that index. Because of this, the final official closing price for the stock market index might end up being slightly different from the final payout price used for expiring contracts.
Trading hours are getting a revamp as well.
Index options and futures will usually trade until 3:45 PM, but any contracts expiring on that day will lock and stop trading 15 minutes earlier, at 3:30 PM.
On the other hand, individual stock derivatives will keep trading until 3:45 PM every day, even on expiration days. Finally, an extra post-market stock session will run from 3:50 PM to 4:00 PM, letting traders buy or sell shares at the official final closing price.
These new rules mean Indian traders will likely need to tweak how they manage their trades on expiration days.
Because open options contracts will now settle based on a 30-minute average price instead of a single final auction price, positions might behave differently in the final minutes. Indian traders should also adjust their entry and exit timing to account for the earlier trading cutoff on expiring index contracts and the shorter auction window.
Related: SEBI Panel Backs 30-Minute VWAP for F&O Expiry: Why Indian Traders Still Face Closing-Price Risk
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