CAS Phase 2 Stocks List: What the Category II Rollout Could Mean for the Rest of the Market
SEBI’s Closing Auction Session (CAS) went live on August 3, 2026, but only for one slice of the market: stocks that carry active Futures & Options (F&O) contracts, officially labelled Category I. Every other listed stock — the far larger Category II bucket — was left out of Phase 1 and continues to use the old volume-weighted average price (VWAP) method to determine its daily close.
SEBI’s circular — mentioned that Category II securities will keep the existing methodology “until further notice” or “at a later phase”. Retail traders have watched CAS reshape closing prices, intraday square-off timings, and even GTT order behavior for F&O names. The moment Category II gets pulled into the same framework, it won’t just be a few hundred derivative stocks affected — it will be virtually every listed company on NSE and BSE. That is a structural shift the entire trading community will want to see coming.
What Actually Changed in Phase 1
To understand why Phase 2 matters, it helps to recap what already happened:
- Category I (F&O stocks): Continuous trading now stops at 3:15 PM. A structured auction window follows — an order entry phase, a randomized cutoff between roughly 3:28 and 3:30 PM to prevent last-second gaming, and a matching phase that produces a single equilibrium closing price.
- Category II (everything else): Trading continues normally to 3:30 PM, and the closing price is still calculated using the VWAP of the last 30 minutes of trade, exactly as before.
- F&O contracts: These continue trading slightly longer, until around 3:40 PM, with a short post-close session afterward.
The rationale behind CAS is straightforward: an auction-based close reduces last-minute price manipulation, improves the reliability of settlement prices for derivatives, and aligns India more closely with how mature global exchanges determine closing prices.
Why “Category II Rollout” Is the Phrase to Watch
SEBI explicitly designed this as a phased implementation. Regulatory language pointing to a “later phase” for Category II is a strong signal — not a maybe. Historically, SEBI has followed exactly this pattern with other market structure changes: pilot on a smaller, more liquid segment, observe outcomes for a few months, then expand.
For Category II, that expansion would mean:
- Small-cap and mid-cap stocks without F&O contracts would move to the same auction-based closing mechanism.
- Index funds, ETFs, and portfolio valuations that rely on closing prices of non-derivative stocks would be affected.
- Brokers would need to revise intraday square-off timings, GTT trigger cutoffs, and order-book rules for thousands of additional securities, not just a few hundred.
- Retail investors trading small and mid-cap names would need to relearn the same lessons Category I traders learned in August — random cutoff times, price bands around a reference price, and carry-forward rules for unexecuted orders.
What a “Phase 2 Stocks List” Would Likely Look Like
While SEBI has not published a firm date or a confirmed list for Category II, based on how Phase 1 was structured, a Phase 2 rollout would most plausibly:
- Start with the most liquid Category II names — stocks with high daily trading volumes and wide shareholder bases, even without F&O contracts.
- Exclude illiquid and trade-for-trade (TFTS) securities initially, since the auction mechanism depends on having enough order flow to discover a meaningful equilibrium price.
- Be published via NSE and BSE circulars, not just a SEBI press release, since the exchanges are responsible for operational rollout and broker coordination.
- Follow a similar transition runway — Phase 1 was announced via a January 2026 circular for an August 2026 go-live, giving the market roughly seven months of notice.
What Traders and Investors Should Do Now
Even without a confirmed Category II timeline, there are a few sensible steps:
- Track SEBI and exchange circulars directly, rather than relying solely on secondary summaries, since implementation dates and stock lists will come from official notifications.
- Watch your broker’s announcements, since square-off timings, GTT cutoffs, and margin rules typically get updated ahead of any expansion.
- Don’t assume today’s VWAP-based closing price behavior for Category II stocks is permanent — build a mental checklist now so you’re not caught off guard when the transition happens.
- Reassess strategies that depend on the final 30 minutes of trading for non-F&O stocks, since those dynamics will change the moment Phase 2 begins.
The Bottom Line
Phase 1 of CAS was the test run. Category II is the main event — because it touches nearly every stock that Phase 1 didn’t. SEBI has been clear that the door is open, not closed, on extending the auction-based closing mechanism to the rest of the market. Until an official Category II stocks list and effective date are published, the smartest move is to stay close to SEBI and exchange circulars, understand how Phase 1 worked in practice, and be ready to adapt the moment the notification drops.
This article is for informational purposes only and does not constitute investment advice. Always verify implementation dates and affected securities directly through SEBI, NSE, and BSE circulars.
Suyesh Gusain holds an MA in Mass Communication and is NISM-certified in Equity Derivatives and Research Analysis, with two years of hands-on experience trading Indian equity markets. He writes about SEBI regulations and market mechanics in practical, easy-to-understand terms for retail traders and investors.
Frequently Asked Questions
What is CAS Phase 2?
CAS Phase 2 refers to the expected next stage of SEBI’s Closing Auction Session rollout, in which Category II stocks (those without active F&O contracts) would move from the old VWAP-based closing price method to the same auction-based mechanism already used for Category I (F&O) stocks since August 3, 2026.
What is the difference between Category I and Category II stocks under CAS?
Category I stocks have active F&O contracts and already close through the auction-based CAS. Category II stocks are every other listed security; they currently continue trading until 3:30 PM with the closing price still set by the volume-weighted average price of the last 30 minutes.
Has SEBI released a Category II stocks list or a Phase 2 date?
No. As of now, SEBI has only confirmed that Category II stocks will continue with the existing VWAP method “until further notice,” while leaving the door open for expansion at a later phase. No official Phase 2 stock list or effective date has been published.
When is CAS Phase 2 likely to be implemented?
There’s no confirmed timeline. Based on the Phase 1 pattern — a circular in January 2026 followed by a live rollout in August 2026 — any Phase 2 announcement would likely come with several months’ advance notice through SEBI and exchange circulars.
Which stocks would be included first if Category II is rolled out?
If SEBI follows the same approach as Phase 1, the most liquid, actively traded Category II stocks would likely be included first, since the auction mechanism needs sufficient order flow to find a reliable closing price. Illiquid and trade-for-trade (TFTS) securities would likely be added later, if at all.
How would Phase 2 affect intraday traders and GTT orders?
If Category II stocks move to CAS, brokers would need to revise intraday auto-square-off timings and GTT/price-alert trigger cutoffs for those stocks, similar to the changes already made for F&O stocks — where auto-square-off shifted earlier and GTT triggers now stop at the new continuous-trading cutoff.
Where can I get official updates on the Category II rollout?
The most reliable sources are SEBI circulars, NSE and BSE implementation notices, and official broker communications — not third-party blogs or forecasts, since the exact stock list and date will only be confirmed through these channels.