NSE To Revise Pre-Open Session Timings: What's Changing In Stock Market?

The National Stock Exchange (NSE) will introduce changes to its pre-open market session from September 7, altering the way orders are collected and matched during the 15-minute window before regular trading begins.

The overall pre-open session will continue to run from 9:00 am to 9:15 am.

However, the exchange will divide the period into separate stages for order placement and price discovery, bringing the framework closer to the mechanism followed in the Closing Auction Session.

Under the revised system, both market and limit orders can be placed between 9:00 am and 9:05 am, as per NSE.

The rules will then change for the next five minutes. From 9:05 am to 9:10 am, the exchange will accept only limit orders.

The subsequent phase, from 9:10 am to 9:12 am, will be used for order matching and determining the opening price.

The remaining portion of the 15-minute pre-open period will continue under the applicable existing framework.

The changes separate order collection from the actual matching and price discovery process, marking a shift from the current pre-open arrangement.

Market Orders To Get Priority

Market-market orders will receive the highest priority during the pre-open matching process under the revised framework, as per a report by NDTV Profit.

The restructuring means that different order types will be subject to specific time windows before the exchange moves into the matching and opening-price determination stage, it said.

The NSE’s changes are aimed at making the pre-open auction process more structured and strengthening price discovery at the start of the trading session.

Pre-Open Mechanism To Mirror CAS

The revised framework will bring the pre-open auction closer to the principles used in the Closing Auction Session (CAS), NSE said.

The CAS functions as a call auction mechanism, bringing together buy and sell orders to establish a single closing price for eligible stocks in the cash segment where derivative contracts are available.

The NSE has said the closing auction mechanism is intended to improve transparency, integrity and fairness in price discovery. The changes to the pre-open session, hence, are expected to create greater consistency between the mechanisms used to establish opening and closing prices.