SEBI’s Secondary Market Advisory Committee meets on 15 October 2026 to decide the future of the closing auction session. The session began on 3 August for stocks that have F&O contracts. Some market participants say it adds risk on expiry days. SEBI will now weigh that feedback before it issues any circular.
How the Closing Auction Session Works
A closing auction session is a short window at the close of trading. Buyers and sellers place orders, and the exchange uses them to set the closing price of a stock. SEBI calls it CAS for short.
The idea is simple. Instead of using many small trades, the exchange collects orders and matches them at one price. SEBI introduced it to produce a better closing price for the cash market.
Before CAS, the closing price of a stock was the volume-weighted average price, or VWAP, of trades in the last 30 minutes. VWAP is an average that gives more weight to prices where more shares traded. For stocks with F&O contracts, SEBI replaced that with an auction from 3.15 pm to 3.35 pm.
SEBI’s 2025 proposal described four steps in the session: a reference price, order entry, a random close and a final match. It also proposed a 3% band around the reference price. The reference price came from VWAP between 3 pm and 3.15 pm.
That proposal also covered contract timings. Index derivatives would keep closing at 3.30 pm. Near-month stock derivatives would close at 3.35 pm on expiry days. These timings matter, because the auction and the contract close sit very near each other.
Why the Closing Price Matters for F&O Contracts
The closing price does more than end the day. On expiry day, it can decide who gains and who loses on open positions.
At NSE, the final settlement price of index futures and options is the closing value of the index on expiry day. For contracts on single stocks, it is the closing price of that stock. BSE ties its final settlement to the closing value in a similar way.
Here is a simple example. Say an option holder expects a stock to close near ₹500. If the auction sets the close at ₹490, the settlement value changes. A small move in the close can change the result for a large number of traders.
What SEBI Is Reviewing on 15 October
The agenda is the future of CAS, mainly for derivatives settlement on expiry days. SEBI asked for public comments on how the new system works in practice. According to Whalesbook, about 20,000 responses came in by the early October deadline.
| Date in 2026 | Event |
|---|---|
| 3 August | CAS starts for stocks with F&O contracts |
| September | SEBI says it will look at how derivative settlement prices are set |
| Early October | Deadline for public comments |
| 15 October | Advisory committee meets on the future of CAS |
The September step comes from Policy Circle. The October dates come from Whalesbook.
What Traders and Brokers Want
Many traders ask SEBI to go back to the 30-minute VWAP for derivatives. Their argument is simple. They say the older method gives steadier prices for settling F&O contracts.
The auction has a purpose too. SEBI designed it to give large investors a fairer closing price. SEBI has to balance both views.
A good closing price helps the cash market. A steady settlement price helps derivatives traders. One number now has to do both jobs, and that is the heart of this review.
SEBI first proposed the auction in August 2025. The goal was to cut volatility, improve fairness and make it easier for large and passive investors to trade at the close.
What Could Happen Next
SEBI has not published the outcome of the meeting in the sources we checked. Traders and institutions are waiting for an official circular. Until it arrives, nothing changes for the rules that are in force today.
Three things are worth watching:
- Whether CAS stays as it is for all stocks that have F&O contracts.
- Whether derivatives settle on the auction price or on the 30-minute VWAP.
- The date on which any change takes effect.
The answer matters for hedging and for portfolio values on expiry days. A rule change can alter how traders plan their positions in the final hour.
How F&O Traders Can Prepare
You cannot control the rule. You can control how you prepare. Start with the basics.
To trade F&O, you need a demat and trading account with a SEBI-registered broker. You also need the F&O segment to be switched on and enough margin in the account. Check these before expiry week.
Here are some simple steps:
- Read the exchange circular as soon as it comes out.
- Check which price your contract will use for final settlement.
- Be careful with large positions near the close on expiry day.
- Turn on alerts in your stock trading app for circulars and expiry dates.
Also keep a note of expiry dates in your calendar. Traders have reported sharp swings on expiry days, according to Whalesbook. A plan made in advance is easier to follow than a plan made in a hurry.
This is general information and not advice. Your risk depends on your own positions and goals.
Why This Review Matters Beyond Traders
The closing price feeds many other things. Mutual funds use it to value their holdings. Index funds and ETFs track it. Large investors use it to place their final orders for the day.
That is why SEBI weighs both sides with care. A rule that helps one group can create new problems for another.
The advisory committee gives its view. SEBI then decides the next step. The final rule will come through a SEBI circular, and the exchanges will follow with their own notices.
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