The National Stock Exchange (NSE) has changed the rules for its pre-open trading session from September 7. However, the overall timing of the session will remain unchanged at 9:00 AM to 9:15 AM.
Under the revised system, the 15-minute pre-open session will be divided into different phases. One of the biggest changes is that market orders will not be allowed during the second phase of the session.
The changes are aimed at improving coordination between the cash and derivatives markets and making the transition to regular trading smoother.
How Will the New Pre-Open Session Work?
From September 7, the pre-open session will continue for 15 minutes but will work in four stages.
From 9:00 AM to 9:05 AM, investors can place, modify or cancel both limit and market orders.
From 9:05 AM to 9:10 AM, only limit orders will be allowed. Investors can place, modify or cancel limit orders during this period, but market orders will not be accepted.
From 9:10 AM to 9:12 AM, the exchange will determine the opening price, match orders and confirm trades. Earlier, this process was scheduled from 9:08 AM to 9:12 AM.
The final three minutes, from 9:12 AM to 9:15 AM, will act as a buffer period before normal continuous trading begins.
Which Securities Will Be Covered?
The revised rules are not limited to futures and options traders. They apply to eligible securities traded in the cash or equity market during the pre-open session.
This includes main-board listed shares, SME shares, partly paid-up shares, Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).
This means the changes can affect investors trading in a wide range of listed securities, not just shares of large companies.
Why Is NSE Changing the Rules?
NSE is revising the pre-open session to better align the opening price-discovery process with the Closing Auction Session (CAS) framework introduced in the equity cash market.
The changes are also expected to create better coordination between cash and derivatives trading and make market operations smoother.
What Is the Closing Auction Session?
The Closing Auction Session is designed to make the process of determining a stock’s closing price more transparent and efficient.
Under this system, buy and sell orders are brought together through an auction-based mechanism. These orders are then used to determine the closing price of eligible stocks.
For investors, the key point to remember is simple: the pre-open session will still run from 9:00 AM to 9:15 AM, but the rules for placing orders during those 15 minutes have changed from September 7.
