This will be applicable for now only to those stocks that currently have futures and options contracts. This session will also determine the closing price for these stocks, and trading after 3:15 PM every day starting Monday will change accordingly.
Currently, trading continues normally till 3:30 pm. The volume-weighted average price (VWAP) of all trades made between 3 PM and 3:30 PM is eventually determined as the closing price of the stock.
Under the new mechanism, regular trading in these F&O stocks will end at 3:15 PM, followed by a 20-minute session between 3:15 PM and 3:35 PM. The closing price will then be discovered by matching eligible buy and sell orders as per the exchange’s methodology.
Here’s what will transpire during the final few minutes of the trading session hereon:3:05 PM
All intraday positions will be auto-squared off.
3:15 PM – 3:20 PM
The exchange will calculate the reference price. If you place an order during this period, it will only remain in request mode and will be sent to the exchange only at 3:20 PM. Orders will be accepted within a 3% higher or lower range of the reference price, and modification of orders placed before 3:15 PM will not be allowed.
3:20 PM – 3:25 PM
Only limit orders can be placed, modified, or cancelled. The same cannot be done for market orders. A limit order only trades at the specified price chosen by the buyer or seller, while a market order trades immediately at the best price currently.
3:30 PM – 3:35 PM
Orders will be matched and a closing price will be determined over the next five minutes. Can you place orders during this period? No.3:40 PM
Closing of the session.
How will the exchange determine the reference price?
It will be done by analyzing every trade executed between 3 PM and 3:15 PM, using the volume-weighted average price of these trades. It is this reference price that will be used to begin the auction. Your orders should only be within the +3% to -3% range of the reference price for them to get accepted.
Suppose the reference price of a stock has come to ₹1,000. The 3% upper limit would mean ₹1,030, and the 3% lower limit would mean ₹970. This means that during the closing auction session, you can only place orders in the ₹970 to ₹1,030 range. If orders are placed below ₹970 or above ₹1,030, they will be rejected.
If you’re an F&O trader, the closing price will only be determined by the closing auction.
If you’re an intraday trader, your existing open positions will be squared off at or after 3:05 PM. For cash market shares, intraday trading ends at the usual time of 3:20 PM.
