Circular No. HO/47/11/11(3)2025-MRD-POD2/I/2765/2026, Dated 16.01.2026
1. Introduction
Securities and Exchange Board of India (SEBI) has introduced a Closing Auction Session (CAS) in the equity cash segment to improve fairness, transparency, and efficiency in the discovery of closing prices in the securities market.
2. Objective Of The Closing Auction Session
The CAS is aimed at ensuring a more robust and manipulation-resistant closing price discovery mechanism. By aggregating buy and sell orders at the close of trading, the session seeks to reflect true market demand and supply.
3. Change In Closing Price Methodology
Under the new framework, the closing price for derivative-linked stocks will be determined through the Closing Auction Session. This marks a shift from the existing Volume Weighted Average Price (VWAP)-based methodology, aligning the closing price more closely with actual market consensus.
4. Modification Of Pre-Open Auction Framework
Alongside the introduction of CAS, SEBI has aligned and modified the framework governing the pre-open auction session. These changes aim to harmonise auction mechanisms at both the opening and closing of the trading day, enhancing overall market efficiency.
5.Conclusion
The introduction of the Closing Auction Session represents a significant reform in India’s equity market structure. To be implemented in a phased manner from August 3, 2026, the new framework is expected to strengthen price discovery, reduce volatility at market close, and enhance investor confidence.
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