Closing Auction Session in the Equity Segment: What Clients Should Know

: Blog; 20 March 2026; Hits: 18

Closing Auction Session in the Equity Segment: What Clients Should Know

Important Market Update

Equity Market Update

The stock exchange has introduced a new process called the Closing Auction Session, or CAS. This changes how the final closing price of certain shares will be determined. Here is a simple explanation of what this means and what clients should keep in mind.

Notice Date: 19 March 2026 Segment: Equity For Client Awareness

In simple words

For certain shares, the closing price will now be discovered through a short auction-style process near market close instead of depending only on the last trade of the day.

Why this matters

The closing price is important for valuation, market analysis and reference purposes. A structured process helps make it more fair and more transparent.

What is the Closing Auction Session?

The Closing Auction Session, or CAS, is a special process introduced near the end of the trading day to determine the closing price of certain shares in a more systematic way.

Many investors and market participants look at the closing price as an important benchmark. It is used for valuation, settlement reference, index calculations and general market analysis. Because of this, the exchange wants the closing price to reflect actual market demand and supply as fairly as possible.

Simple understanding: instead of the market close depending only on one final trade, the exchange will try to discover a more balanced closing price through a short auction-based matching process.

Which shares will this apply to first?

This process will be introduced in phases.

In the first phase, it will apply to shares in the cash segment where derivatives contracts are available. In other words, the exchange is beginning with stocks that are already part of the derivatives universe.

This does not mean that every listed share will immediately come under the Closing Auction Session.

How will the reference price be decided?

Before the auction process can begin, the exchange needs a starting reference price. This reference price is important because the allowable band during CAS will be calculated around it.

If there are trades between 3:00 PM and 3:15 PM

The reference price will be based on the VWAP of those trades.

VWAP means Volume Weighted Average Price. In very simple words, it is an average price where bigger quantity trades get more weight than smaller trades.

If there are no trades in that period

The exchange may use the last traded price of the day.

If there is no trade in the security during the day, then the previous closing price may be considered, subject to adjustment where required.

Example: if a share has a VWAP of Rs 1,000 between 3:00 PM and 3:15 PM, then Rs 1,000 becomes the reference point for the Closing Auction Session.

What is the price range allowed during CAS?

During the Closing Auction Session in the equity segment, the permissible range will be plus or minus 3% from the reference price.

Illustration

If the reference price is Rs 100

Orders during CAS can generally fall within a range of about Rs 97 to Rs 103.

Why this exists

The purpose is to control extreme movement

This defined range helps the exchange discover a closing price in an orderly manner instead of allowing unreasonable price jumps.

Which orders are allowed during CAS?

Not every order type can be placed during the Closing Auction Session.

Allowed order types

Limit Orders
Market Orders

These orders can participate in the auction process used to discover the closing price.

Order types not allowed

Iceberg Orders
Revealed Quantity Orders
Stop Loss Orders

Clients should be careful while placing orders near market close and should not assume that every order type will be accepted during this session.

How will the final closing price be determined?

For shares where CAS is applicable, the exchange will determine the official closing price based on the equilibrium price discovered during the Closing Auction Session.

If an equilibrium price is discovered

That equilibrium price becomes the official closing price for the day.

If no equilibrium price is discovered

The exchange will use the fallback reference mechanism to determine the closing price.

In simple language, the exchange now has a structured method for finding the closing price even if the auction does not produce a matched result.

What kind of information may be visible during CAS?

During the auction process, the exchange may show indicative information to improve market transparency.

Indicative equilibrium price
Indicative tradable quantity
Total buy quantity and sell quantity
Imbalance quantity
Whether the imbalance is on the buy side or sell side

This gives market participants a better idea of how the closing price is shaping up.

What should clients keep in mind?

The closing price may work differently now

For applicable shares, the final close may now be discovered through an auction-style process rather than depending only on the last trade.

Be careful near market close

Since special rules and price band limits apply, it is wise to review your price and order type properly before placing any order near closing.

Only certain order types are accepted

Some advanced or conditional orders are not permitted during the Closing Auction Session.

This is intended to improve fairness

The aim of the process is to make the closing price more transparent, more balanced and less dependent on isolated trades.

Main takeaway: for certain stocks, the final closing price will now be determined through a formal exchange process designed to better reflect real buy and sell interest.

Frequently Asked Questions

What is CAS in very simple language?

CAS is a short exchange process near market close that helps decide the final closing price of certain shares in a more balanced and transparent way.

Will this apply to all shares immediately?

No. It will be introduced in phases. Initially, it applies to shares in the cash segment where derivatives contracts are available.

How is the starting reference price decided?

It is generally based on the VWAP of trades between 3:00 PM and 3:15 PM. If there are no trades in that period, the exchange may use the last traded price or other fallback rules.

What is the permitted price range during CAS?

The allowable band is generally plus or minus 3 percent from the reference price for applicable securities in the equity segment.

Can I place all order types during CAS?

No. Limit orders and market orders are allowed. Some order types such as iceberg orders, revealed quantity orders and stop loss orders are not allowed during this session.

How is the official closing price finally determined?

If the exchange discovers an equilibrium price during the auction, that becomes the official closing price. If not, the exchange uses a fallback mechanism.

Why has this system been introduced?

The main purpose is to make the closing price more orderly, more transparent and more representative of genuine market demand and supply.

Important Note for Clients

This is an exchange-level market structure update. Clients are advised to remain mindful while placing orders close to market closing, especially in stocks where the Closing Auction Session becomes applicable.