India’s markets regulator will introduce a 10-minute closing auction and new VWAP-based expiry settlements from 7 December 2026, aiming to strengthen price discovery and curb late-session manipulation.
India’s markets regulator has overhauled the way the stock market closes, introducing a structured 10-minute closing auction for cash equities and refining how expiring derivatives are settled. According to reporting by Goodreturns and Livemint, the changes are intended to improve price discovery and make the close less vulnerable to late-order distortions. The new framework takes effect on 7 December 2026.
Under the revised cash-market regime, the closing auction will run from 3.30 pm to 3.40 pm on trading days, with the window split into staged phases for reference-price calculation and order entry. Market participants will be able to submit both limit and market orders during the middle of the session, but the final stretch will allow only limit orders. The order-entry cut-off will not be fixed in advance; instead, it will close at a random point between 3.38 pm and 3.40 pm, a design meant to make it harder for traders to anticipate the exact end of the auction and game the closing price, according to the reports.
After the auction, exchanges will publish the discovered closing price, and a post-close trading session will run from 3.50 pm to 4 pm at that price. The regulator has also changed the settlement logic for expiring index and stock derivatives. As described by Goodreturns and Times of India, index futures and options due to expire will use a settlement price derived from the volume-weighted average prices of the underlying stocks during the final 30 minutes of the cash session, while stock derivatives will use the stock’s own VWAP across all exchanges over the same period. Exchanges will also disseminate indicative settlement values throughout that half-hour, though these will not be the final settlement figures.
Business Standard, Kotak Neo and Nation Press reported that the broader overhaul follows a review of the auction mechanism and market feedback, with some provisions linked to the handling of unexecuted orders due to begin later, on 8 February 2027. Taken together, the changes point to a more formalised closing process and a shift away from reliance on a single end-of-day price, especially on expiry days when small moves in the underlying market can have an outsized effect on derivatives positions.
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