NSE to start pre-open session for equity derivatives from December 8

The NSE will introduce a 15-minute pre-open session for equity derivatives from December 8, aiming to improve price discovery and align futures trading with the cash market

The National Stock Exchange (NSE) will roll out a pre-open session for equity derivatives from December 8. The pre-open session will be conducted using a call auction mechanism for 15 minutes, from 9:00 am to 9:15 am.

 

Why is NSE introducing a pre-open session for derivatives?

 

The move is aimed at enhancing price discovery, similar to the pre-open session already operational in the cash segment. The Securities and Exchange Board of India (Sebi) had issued a circular in May detailing this framework, along with new metrics for open interest calculations and market-wide position limits.

 

“The pre-open session is applicable to current-month futures on both single stocks and indices. In the last five trading days before the current month expiry, this session shall be extended to next-month futures contracts,” the NSE said in a circular.

 

How will the pre-open session work?

 

Between 9:00 am and 9:08 am, traders can place orders, which will then be matched and confirmed until 9:12 am. The remaining time will serve as a buffer period for transition to the regular market. Lot size, tick size, and price bands will remain the same as in normal trading.

 

Special order types such as stop-loss and immediate-or-cancel (IOC) orders will not be permitted during the pre-open. Additionally, no modifications or cancellations will be allowed during the order-matching period. All unmatched or outstanding limit orders will automatically move to the normal market with their original timestamps intact.

 

What happens during trading disruptions or circuit filters?

 

“In case of an index-based market-wide circuit filter breach or any outage (stopping of trading, either suo motu by the Exchange or for reasons beyond its control), the market shall open with a pre-open session, and its timings shall be informed separately on that day,” the circular added. 

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