Changes to the pre-open session and ETF price bands

From September 7, 2026, the way orders can be placed during the pre-open session is changing. There are also several changes to ETF trading, including Gold and Silver ETFs becoming part of the pre-open session for the first time.

Before regular trading begins at 9:15 AM, exchanges run a pre-open session from 9:00 AM to 9:15 AM.

Unlike regular market hours, where buy and sell orders are matched continuously, the pre-open session first collects orders and then matches them at a single price. The exchange looks for the price at which the maximum quantity can be bought and sold, and this becomes the opening price for the day.

The idea is to allow orders that have built up overnight, including those reacting to news and other market developments, to come together before regular trading begins. This helps in discovering a more stable opening price and reduces volatility when the market opens at 9:15 AM.

Changes to the pre-open session

There is also a change in the order in which trades are matched.

Currently, limit orders get priority over market orders during the pre-open matching process. From September 7, market orders will get priority over limit orders.

The matching will happen in this order:

• Eligible market orders will first be matched with other market orders based on the time they were placed.
• Any remaining market orders will then be matched with eligible limit orders. Better-priced limit orders get priority, and where the price is the same, the earlier order gets priority.
• Finally, the remaining limit orders will be matched with one another using the same price-and-time priority.
• All trades that are matched during the pre-open session are executed at the opening price discovered during the session.

So, the overall pre-open session will remain 9:00 AM to 9:15 AM. The key changes are:

• Market orders can be placed only during the first five minutes.
• Limit-order entry continues until the exchange randomly closes the order-entry period between 9:08 AM and 9:10 AM.
• Order matching starts immediately once order entry closes.
• Market orders will now get priority over limit orders during matching.

Special order types such as Stop Loss (SL), Immediate or Cancel (IOC), and Disclosed Quantity (DQ) orders will not be allowed during the pre-open session.

Gold and Silver ETFs to be part of the pre-open session

Currently, ETFs do not participate in the pre-open session. Equity, debt, Gold, Silver, Liquid and Overnight ETFs all start trading only when the regular market opens at 9:15 AM.

From September 7, this will change for Gold and Silver ETFs.

Gold and silver continue to trade in international markets when Indian exchanges are closed. Their prices can therefore move significantly before trading in the corresponding ETFs starts in India.

To improve price discovery at the open, Gold and Silver ETFs will now be included in the pre-open session. Orders collected during this period will be used to determine an opening price before regular trading begins at 9:15 AM.

Other ETFs, including equity, debt, Liquid and Overnight ETFs, will continue to start trading at 9:15 AM.

The base price used to set ETF price bands is changing

ETFs have upper and lower price limits that determine the range within which they can trade during the day. These limits are calculated from a reference known as the base price.

Currently, the base price for equity, debt and commodity ETFs is their NAV from two trading days earlier, or T-2 NAV.

The problem is that a two-day-old NAV can become stale when the underlying asset moves sharply.

For example, suppose an ETF has a T-2 NAV of ₹100. With a 20% price band, it can trade between ₹80 and ₹120.

If the underlying asset rises sharply and the ETF is already trading around ₹119, it has only about ₹1 of room left before reaching its upper price limit, even if the asset it tracks continues to rise. The reverse can happen when the underlying asset falls sharply, and the ETF is close to its lower price limit.

This happened with Gold and Silver ETFs during the sharp moves in commodity prices earlier this year. Price bands based on T-2 NAV became inadequate for the ETFs to keep up with movements in their underlying assets, and exchanges temporarily moved to a more recent reference price.

From September 7, the base price will instead be the ETF’s closing market price from the previous trading day, calculated using the volume-weighted average price of trades during the last 30 minutes of trading.

If the ETF does not trade during those 30 minutes, its last traded price for the day will be used. If it does not trade at all on the previous day, the latest available closing NAV will be used.

This should keep price bands closer to where the ETF is actually trading and reduce situations where an old reference price restricts normal price movement.

ETF price bands are changing too

Along with changing the base price, the exchanges are moving away from the same fixed 20% price band for most ETFs.

From September 7:

• Equity and debt ETFs, except Liquid and Overnight ETFs, will start with a price range of 10% above and below the base price. If the ETF reaches one side of this range, that side can be widened by another 5 percentage points after a cooling-off period, up to a maximum of 20% from the base price.
• Gold and Silver ETFs will start with a 6% range above and below the base price. If required, the range can be widened by 3 percentage points at a time after a cooling-off period. If international gold or silver prices move significantly, exchanges can widen these limits further.
• Liquid and Overnight ETFs will have a fixed 5% range above and below the base price.

The cooling-off period is generally 15 minutes. Trading does not stop completely during this period and can continue within the existing price range. During the last 30 minutes of the trading day, the cooling-off period is reduced to five minutes.