SEBI Proposes Closing Auction Session In Equity Cash Segment

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  • Last Updated on 25 August, 2025

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Closing Auction Session

Consultation Paper, Dated 22.08.2025

1. SEBI Proposes Closing Auction Session in Equity Cash Segment

The Securities and Exchange Board of India (SEBI) has issued a Consultation Paper proposing the introduction of a Closing Auction Session (CAS) in the equity cash segment. The proposal initially focuses on Futures & Options (F&O) stocks with adequate liquidity, with the possibility of extending the framework to cover all stocks in due course. SEBI has invited public comments on the overall framework, including whether CAS should be adopted as the mechanism for determining closing prices.

2. Framework for the Proposed Closing Auction Session

According to the Consultation Paper, CAS would function as a separate trading session lasting 20 minutes, scheduled between 3:15 pm and 3:35 pm. The session would be divided into four phases to streamline order placement, modification, cancellation, and price discovery. This structured approach is expected to improve the reliability of closing prices while reducing volatility during the final minutes of market trading.

3. Key Features of CAS Implementation

One of the important proposals under the CAS framework is to allow order entry, modification, and cancellation during the first five minutes of the session. This flexibility will provide participants with the opportunity to adjust their positions before the final price discovery process begins. The mechanism is also expected to encourage greater participation, improve liquidity in the closing session, and ensure transparency in the determination of closing prices.

4. Public Feedback and Implementation Timeline

SEBI has emphasized the importance of stakeholder feedback before finalizing the CAS framework. The regulator has invited comments and suggestions from market participants, investors, and other stakeholders by September 12, 2025. After careful evaluation of the responses, SEBI may move towards phased implementation of CAS, starting with F&O stocks, and gradually expanding its scope to all equities in the cash market.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied