SEBI Reviews F&O Expiry Rules: Can NSE, BSE and Angel One Stocks Benefit From Changes in Settlement and Trading Hours?
India’s derivatives market is undergoing changes aimed at improving the closing auction process and reducing uncertainty around expiry-day settlement. The Securities and Exchange Board of India (SEBI) is reviewing recommendations on settlement prices, market timings and order handling. These changes could influence trading activity across stock exchanges and brokerage platforms, including NSE, BSE and Angel One.
Existing VWAP Settlement Method to Continue
SEBI’s Secondary Market Advisory Committee (SMAC) has favoured retaining the existing 30-minute Volume-Weighted Average Price (VWAP) methodology for settling index and stock derivatives on expiry days, rather than immediately shifting to a formula incorporating Closing Auction Session (CAS) prices. Under this method, the settlement price is calculated using trades executed between 3:00 PM and 3:30 PM during the continuous trading session.
Also read: Tata Motors PV: How Is India’s EV Leader Expected to Perform in Q2 FY27?
The committee has reportedly recommended retaining this arrangement for at least another year before considering a transition to a new methodology. The recommendation follows concerns raised by market participants after CAS was introduced for stocks in the futures and options (F&O) segment on August 3. Retaining the existing method could provide greater continuity for traders while SEBI evaluates the impact of the auction mechanism.
Proposed Changes to Market Timings
The committee has also favoured a revised trading schedule. Under the proposal, normal trading in stocks covered by CAS would continue until 3:30 PM, followed by a one-minute transition period. The closing auction would run from 3:31 PM to 3:40 PM, while derivatives trading would continue until 3:45 PM.
Also read: Sensex & Nifty 50 | Stock Market Live Updates Today: Sensex Surges 1.76%, Nifty 50 Gains 1.60%; Bharti Airtel, Tech Mahindra and HCL Tech Lead Gains
This arrangement would give derivatives traders an additional five minutes after the closing auction ends to manage their positions. It could also make the transition between regular stock trading, the auction and derivatives trading more coordinated. However, the revised schedule remains a proposal and its impact will depend on SEBI’s final decision and implementation.
Indicative Equilibrium Price Display to Continue
The committee has reportedly favoured continuing the display of the Indicative Equilibrium Price (IEP) during CAS. The IEP indicates the price at which buy and sell orders for an individual stock could potentially match during the auction. An indicative index value calculated using these prices, however, does not represent executed trades.
Continuing the display could help market participants monitor potential auction prices. At the same time, the distinction between an indicative value and an actual traded price remains important, as traders could otherwise misinterpret the information when making decisions.
Also read: MRPL Q2 Profit Doubles to ₹1,901 Crore, EBITDA Margin Hits 10.1%, but Shares Fall Despite ₹3 Dividend
Market Orders and Iceberg Orders Under Review
The handling of market orders during CAS remains unresolved. Market participants have raised concerns that large orders could influence the indicative equilibrium price and then be cancelled, potentially creating misleading price signals. SEBI is examining how these risks can be addressed.
For iceberg orders, the committee has favoured allowing traders to choose whether their orders remain valid until 3:30 PM or 3:40 PM. Iceberg orders allow traders to place large orders while initially displaying only part of the total quantity. Under the proposed arrangement, orders valid until 3:40 PM would have their full quantity visible during CAS.
Also read: Madhusudan Kela Buys 4.2% Stake in This Railway Stock: Can Its ₹1,000 Crore Order Book Drive Growth?
Can NSE, BSE and Angel One Benefit?
For NSE and BSE, the potential benefit would come if greater clarity around settlement rules and market timings supports derivatives participation and trading volumes. As exchanges, their transaction-related revenues are influenced by market activity, although the recommendations alone do not guarantee an increase in revenue.
Angel One could benefit if the proposed changes support retail participation and derivatives trading activity. Higher client turnover could support brokerage-related revenue, but the actual impact would depend on client activity, pricing and operating costs.
Also read: HDFC Bank IndianOil vs RBL Bank IndianOil XTRA: Which Credit Card Saves More on ₹15,000 Monthly Fuel Spends?
Overall, the recommendations could reduce uncertainty around expiry-day settlement and improve coordination between cash and derivatives trading. Investors should monitor SEBI’s final circular and subsequent trading-volume trends before assessing the financial impact on NSE, BSE and Angel One. The committee’s recommendations are not yet equivalent to a final regulatory decision.