Description

NSE introduces a 15-minute pre-open session from 9:00 AM to 9:15 AM for equity derivatives futures contracts using call auction mechanism, effective from the specified date.

Summary

NSE is introducing a pre-open session in the Equity Derivatives (F&O) Segment following SEBI circular SEBI/HO/MRD/TPD-1/P/CIR/2025/79 dated May 29, 2025. The pre-open session will run from 9:00 AM to 9:15 AM using a call auction mechanism, applicable to current-month futures contracts on single stocks and indices. During the last five trading days before expiry, the session extends to next-month futures contracts.

Key Points

  • Pre-open session duration: 15 minutes (9:00 AM to 9:15 AM)
  • Call auction mechanism will be used
  • Order entry period: 9:00 AM to 9:08 AM with system-driven random closure between 7th and 8th minute
  • Order matching and trade confirmation: 9:08 AM to 9:12 AM
  • Buffer period for transition: 9:12 AM to 9:15 AM
  • Random closure of equity segment and equity derivatives segment pre-open will be independent
  • Both limit and market orders allowed; Stop loss and IOC orders not permitted
  • Same lot size, tick size, and price band as normal market
  • Book type: “PO”

Regulatory Changes

  • Introduction of mandatory pre-open session for equity derivatives futures contracts
  • Pre-open session timing: 9:00 AM to 9:15 AM (before regular trading hours)
  • Three distinct phases: Order Entry Period, Order Matching Period, and Buffer Period
  • In case of market-wide circuit filter breach or outage, market will reopen with pre-open session with timings announced separately

Compliance Requirements

Eligible Contracts:

  • Current-month (M1) futures on single stocks and indices are eligible
  • Next-month (M2) futures become eligible during last 5 trading days before current month expiry
  • Far-month (M3) futures NOT eligible
  • Spread and Option contracts NOT eligible
  • Futures contracts on ex-date of corporate action due to scheme of arrangement NOT eligible

Trading Rules:

  • Members must ensure systems are ready for pre-open session
  • Order entry, modification, and cancellation allowed during 9:00-9:08 AM
  • Only limit and market orders permitted
  • Special term orders (Stop loss, IOC) not allowed
  • Opening price determination occurs during order matching period

Important Dates

  • Circular Reference: NSE/FAOP/71092, Circular No. 184/2025
  • Circular Date: November 03, 2025
  • Reference to SEBI circular dated: May 29, 2025
  • Reference to previous NSE circular NSE/FAOP/69898 dated: August 28, 2025
  • Implementation: To be effective as per exchange notification

Impact Assessment

Market Impact:

  • High impact on all F&O market participants including traders, brokers, and institutions
  • Changes daily trading routine with earlier market start at 9:00 AM
  • Price discovery will begin 15 minutes earlier through call auction mechanism
  • May reduce opening volatility through structured price discovery

Operational Impact:

  • Trading systems and algorithms need updates to handle pre-open session
  • Order management systems must distinguish between pre-open and regular session orders
  • Risk management systems need recalibration for pre-open period
  • Member firms must train trading staff on new session timings and rules
  • Surveillance and monitoring systems require modifications

Technical Impact:

  • Random closure mechanism between 7th and 8th minute requires system adaptation
  • Independent random closure for equity and derivatives segments adds complexity
  • Buffer period implementation needed for smooth transition to continuous trading
  • Order type restrictions (no stop loss/IOC) require validation logic updates

Impact Justification

Major structural change to F&O trading introducing pre-open session affecting all equity derivatives market participants and trading systems