CAS effect: New pre-open session rules kick in. Here’s what changed for investors

The National Stock Exchange has changed the way orders are placed during the equity market pre-open session from September 7, while keeping the overall 15-minute window unchanged. The revised framework came into effect on Monday as Indian equities opened lower, with the Sensex falling over 200 points and the Nifty 50 declining over 50 points in early trade.

The pre-open session continues to run from 9 am to 9:15 am. However, the order-entry window between 9 am and 9:10 am is now split into two parts. Traders can place both market and limit orders only during the first five minutes, from 9 am to 9:05 am.

From 9:05 am to 9:10 am, the exchange will accept only limit orders. Any market order placed during this period will be rejected.


The change is particularly relevant for traders who typically place orders closer to the end of the pre-open session. Under the new system, they can no longer place market orders after 9:05 am and will have to specify a price through a limit order.


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How the new pre-open session will work

The first phase will run from 9 am to 9:05 am. During this period, investors can enter, modify or cancel both market and limit orders. The second phase will run from 9:05 am to 9:10 am. Only limit orders will be allowed during this period. NSE has also provided for random closure during the final two minutes of this phase.

Order matching will take place between 9:10 am and 9:12 am. The next three minutes, from 9:12 am to 9:15 am, will be used as a transition period before the normal market session begins.

This means regular trading will still start at 9:15 am, as usual. The change is only in the order-entry rules during the pre-open auction.

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What changes for traders

A market order is an order to buy or sell at the best available price. It is simple to place, but the final execution price can be uncertain, especially on days when the market opens with a large gap or when a stock is volatile.

A limit order is different. It allows a buyer to set the maximum price they are willing to pay, and a seller to set the minimum price they are willing to accept. This gives traders more control over the execution price.

Under the new framework, anyone placing an order between 9:05 am and 9:10 am will have to use a limit order. This may reduce the chance of sudden price distortions caused by late market orders in the pre-open window.

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Execution priority

NSE has also laid out how orders will be matched in the revised session. Market orders matched with other market orders will get the highest priority, based on time priority. After that, any remaining market orders will be matched with limit orders using price-time priority.

In the final stage, remaining limit orders will be matched against other limit orders, again using price-time priority.

The revised process brings the pre-open session closer to the auction structure used in the Closing Auction Session, or CAS. NSE said the move is aimed at aligning the market-opening mechanism with the closing auction framework.

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