New Pre-Open Session for Equity Derivatives Market Set to Commence Tomorrow

Starting tomorrow, December 8, 2025, the Indian stock market will witness a significant change in its pre-open session, particularly impacting traders in the equity derivatives segment. The National Stock Exchange (NSE) is introducing a pre-open session for equity futures and options (F&O), a move designed to enhance price discovery and ensure a smoother market opening. This initiative aligns the derivatives market with the existing pre-open call auction in the equity cash market.

Key Changes to Note

The pre-open session will be a 15-minute window from 9:00 AM to 9:15 AM, preceding the regular trading hours of 9:15 AM to 3:30 PM. This session will operate using a call auction mechanism, allowing traders to place, modify, or cancel orders. However, actual trading will not occur immediately. The 15-minute session is divided into three distinct phases:

• Order Entry Period (9:00 AM – 9:08 AM): Traders can enter, modify, or cancel orders during this period. The system will undergo a random closure between the 7th and 8th minute.
• Order Matching Period (9:08 AM – 9:12 AM): The system will determine the opening price based on the equilibrium price, matching orders accordingly. No order modifications or cancellations are allowed during this phase.
• Buffer Period (9:12 AM – 9:15 AM): This short period serves as a transition from the pre-open session to the continuous trading session.

Applicable Contracts

The pre-open session will apply to current-month futures contracts on both single stocks and indices. In the final five trading days before the current month's expiry, the session will also include next-month futures contracts. However, certain contracts are excluded:

• Far-month (M3) expiry contracts
• Spread and option contracts on indices and stocks
• Futures on ex-dates due to corporate actions such as mergers or demergers

Order Types and Market Parameters

During the order collection period, both limit and market orders are permitted. However, special term orders like stop-loss and immediate-or-cancel (IOC) orders will not be allowed. The market parameters for the pre-open derivative segment will mirror those of the normal market, including tick size, lot size, and price bands.

Price Discovery and Order Matching

The core objective of the pre-open session is to facilitate efficient price discovery. The opening price, also known as the equilibrium price, will be determined based on the principle of demand and supply, identifying the price at which the maximum number of shares can be traded. The order matching process will follow this sequence:

1. Eligible limit orders are matched with eligible limit orders.
2. Residual eligible limit orders are matched with market orders.
3. Market orders are matched with market orders.

Unmatched limit orders will be carried over to the normal market. Market orders will be converted to limit orders at the discovered opening price and moved to the normal session. If no equilibrium price is discovered during the pre-open session, market orders will be moved at the base price, which is the previous day's closing price.

Potential Impact on Traders

This new pre-open session offers traders an early opportunity to assess market sentiment and order flow before the regular market opens. Real-time indicative prices, equilibrium data, and demand-supply statistics will be available to participants. The move is expected to benefit scalpers, arbitrageurs, and short-term strategists, potentially enabling them to plan their entries more effectively. However, it also raises the question of whether this early peek will genuinely aid trading strategies or simply introduce volatility earlier in the trading day.