The National Stock Exchange (NSE) is set to revise the framework for its pre-open market session from Sept 7, bringing the order collection and price discovery process closer to the mechanism used during the Closing Auction Session. While the pre-open session will continue to operate from 9:00 am to 9:15 am, the exchange is changing the manner in which orders can be placed and matched during the 15-minute window.
The revised framework is aimed at making the pre-open auction process more structured and strengthening the process of price discovery at the start of the trading day.
What Is Changing In NSE Pre-Open Session?
Under the revised framework, market and limit orders will be permitted only during the first five minutes of the pre-open session, from 9:00 am to 9:05 am. From 9:05 am to 9:10 am, only limit orders will be allowed.
The order matching process and determination of the opening price will then take place between 9:10 am and 9:12 am.
This represents a shift from the existing order collection and matching framework and means traders will need to pay closer attention to the timing of their orders, particularly if they rely on market orders during the pre-open session.
Market-Market Orders To Get Priority
Under the revised framework, market-market orders will receive the first priority during pre-open matching. The changes effectively separate the order collection phases from the price discovery and matching process. Traders will therefore have to ensure that their orders are entered within the applicable time windows and comply with the order-type restrictions.
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For traders and investors who actively participate in the opening auction, the changes could require adjustments to their pre-market strategies and order-entry practices.
NSE Aligns Pre-Open Auction With Closing Auction Session
The revised pre-open framework is being aligned with the principles of the Closing Auction Session (CAS), which is used to determine the closing price of stocks in the cash segment where derivative contracts are available. The Closing Auction Session operates as a call auction mechanism, aggregating buy and sell interest at the end of the trading day into a single price discovery process.
According to NSE, the mechanism is designed to strengthen transparency, integrity and fairness in the closing session and bring India's market structure closer to global best practices. By aligning the pre-open auction framework with the closing auction mechanism, NSE is seeking to bring greater consistency to price discovery at both the beginning and end of the trading session.
What Traders Should Keep In Mind
The key change for traders is that the 9:00 am to 9:15 am pre-open window remains unchanged, but the rules governing order placement and matching within that period will change.
From September 7:
- 9:00 am-9:05 am: Market and limit orders allowed.
- 9:05 am-9:10 am: Only limit orders allowed.
- 9:10 am-9:12 am: Order matching and opening price determination.
- Market-market orders: First priority during pre-open matching.
Traders who place orders around the market opening will need to familiarise themselves with the revised timelines to avoid order-entry issues and ensure their strategies are aligned with the new auction mechanism.
from NDTV News- Special https://ift.tt/aPnUYVE
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