Question

What is the duration of the pre-open session and what does it consist of?

Hint:

The 15-minute pre-open session allows better price discovery and smooth transition to regular trading.

Answer 1

The pre-open session is an initial trading period on Indian stock exchanges preceding the regular market opening. Its primary aim is to mitigate price fluctuations and facilitate effective price discovery.\parDuration: 15 minutes (9:00 a.m. - 9:15 a.m.)\parThis session comprises three segments:

Order Entry (9:00 – 9:08 a.m.): Investors may submit, amend, or cancel orders. Order matching is not performed during this time.
Order Matching (9:08 – 9:12 a.m.): New orders and modifications are prohibited. The system matches buy and sell orders to establish the equilibrium price through a multilateral matching system.
Buffer Period (9:12 – 9:15 a.m.): This serves as a transition between the pre-open and regular market sessions. No investor actions are permitted.
This process aids in decreasing volatility potentially caused by significant order imbalances or sentiment shifts due to news.