Britain’s letter writers, and the small businesses that still depend on the post for invoices, contracts and statutory notices, are paying the price for another year of underperformance at Royal Mail.

Just 75.7% of first-class mail was delivered on time in the 12 months to the end of March, the postal operator confirmed on Friday, a country mile from its 93% regulatory target and the first full-year snapshot of life under Czech billionaire Daniel Kretinsky’s EP Group, which completed its £3.6bn takeover last spring.

Performance has actually slipped since the company’s final year on the London Stock Exchange, when 76.9% of first-class and 92.2% of second-class letters arrived on time. The new figures show only 90.2% of second-class post landed within three working days, against a target of 98.5%.

The communications regulator described itself as “very concerned” by the figures. Business Matters understands Ofcom is preparing to open a formal investigation into Royal Mail’s performance as soon as next week – a move that would almost certainly lead to a further multi-million-pound fine on top of the £21m penalty imposed last October, the third-largest in the watchdog’s history.

It is six years since Royal Mail last hit its second-class target and a decade since it cleared the bar on first-class. The slump that began during the pandemic has stubbornly refused to reverse.

Chief operating officer Jamie Stephenson struck a contrite tone, insisting the business is on course to meet new, softer targets of 90% for first-class and 95% for second-class by this time next year.

“We’re putting significant investment into improving reliability and reaching these new delivery targets, but delivering lasting change across a network of this scale takes time,” he said.

The company is ploughing £500m into its five-year improvement plan, which includes offering part-time posties longer hours and scrapping second-class Saturday deliveries – a structural overhaul agreed with Ofcom and rolled out from April.

For Britain’s 5.5 million small businesses, however, the patience required is wearing thin. SMEs remain disproportionately reliant on physical mail for cheques, payment reminders, HMRC correspondence and signed agreements. Slow post means delayed cash flow, missed deadlines and, in the worst cases, penalties from regulators whose own letters arrive late.

Tom MacInnes, policy director at Citizens Advice, was withering in his assessment. Poor performance at Royal Mail, he said, was “business as usual”.

“What’s worse, Royal Mail claims people will have to wait another year until it can meet its new, lower delivery targets,” he added.

In February, postal workers told the BBC that letters had been sitting undelivered in depots for weeks because staff had been instructed to prioritise parcels, which carry fatter margins. Mr Kretinsky was hauled before MPs on the Business and Trade Committee in March, where he said he was “deeply sorry for any letter that arrives late” but flatly denied that parcels were being put ahead of letters. As the House of Commons Library has documented, letter volumes have collapsed from 20 billion items in 2004-05 to around 6.6 billion last year, putting the universal service economics under unprecedented strain.

Ofcom has already eased Royal Mail’s regulatory burden. Since April, the operator has been measured against the lower targets of 90% next-day delivery for first-class and 95% three-day delivery for second-class. The regulator argued the previous benchmarks were “more stretching” than in comparable European countries and would “carry higher costs which would need to be recovered through higher prices” – an unwelcome trade-off for any SME owner who has watched a first-class stamp climb to £1.70.

Whether £500m and a slacker rulebook can finally turn around an institution that has failed its own customers for the best part of a decade is the question now landing on Mr Kretinsky’s desk. On the evidence of Friday’s numbers, the answer is not yet in the post.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

Starting August 3, 2026, the normal market closing time for equity derivatives will be extended by 10 minutes to 3:40 pm from the current 3:30 pm. While the extension is noteworthy, the bigger change lies in how closing prices for eligible securities will be determined.

The move aims to ensure a smoother transition between the cash and derivatives markets at the end of the trading day while maintaining consistency in the pricing framework across segments.

What is the closing auction session?

The CAS is a structured trading window held at the end of the trading day. During this period, market participants place buy and sell orders to determine a single closing price for a security through an auction-based mechanism.

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Unlike the current system where prices evolve through normal trading until market close, the auction process discovers a fair closing price based on orders entered during the designated session.
According to the exchange, CAS will initially apply only to securities in the cash segment that have derivative contracts available. The framework will roll out in phases, and any future expansion will be subject to SEBI guidance and separate operational instructions from the exchange.

Why are derivatives trading hours being extended?

Although CAS applies only to the equity segment, NSE decided to extend trading hours in the derivatives segment to ensure both markets remain aligned during the closing process.

The exchange also clarified that the price bands and pre-trade risk control measures introduced as part of CAS in the cash market will be mirrored in the derivatives segment. This is intended to maintain consistency between the two segments during the closing phase of trading.

How will the closing auction session work?

The CAS will run for 20 minutes, from 3:15 pm to 3:35 pm. The process will begin with a transition phase between 3:15 pm and 3:20 pm, during which the reference price will be calculated using the volume-weighted average price (VWAP) of trades executed between 3:00 pm and 3:15 pm.

Between 3:20 pm and 3:25 pm, participants will be able to enter both market and limit orders. From 3:25 pm to 3:30 pm, only limit orders will be permitted. During this period, market orders cannot be modified or cancelled.

The order entry session will close randomly at any point between 3:28 pm and 3:30 pm, after which the auction process will determine the final closing price.

How will closing prices be calculated?

One key point highlighted by NSE is that there will be no change in the methodology used to calculate closing prices of derivative contracts. The volume-weighted average price (VWAP) used for derivatives closing price calculation will continue to be based on trades executed during the final 30 minutes of trading. However, because market hours are being extended, that 30-minute window will now shift to 3:10 pm-3:40 pm instead of the current 3:00 pm-3:30 pm.

For securities eligible for CAS, the closing price in the cash segment will be determined through the auction process.

Ashish Nanda, President and Digital Business Head at Kotak Securities summed up the shift by noting that the market is moving from a “continuous trading close” to an “auction discovered close”.

Under the current framework, closing prices are derived from the VWAP of trades executed between 3:00 pm and 3:30 pm. Under the new framework, closing prices for F&O-eligible stocks will effectively be linked to a 20-minute auction process running from 3:15 pm to 3:35 pm.

What happens if a stock is removed from F&O?

NSE clarified that eligibility for CAS is linked to the presence of derivatives on the stock. If a security is excluded from the equity derivatives segment on both exchanges, it will no longer be eligible for the CAS.

In such cases, the closing price will revert to the existing methodology and be determined using the VWAP of trades executed during the last 30 minutes of trading. However, if the security continues to be part of the derivatives segment on at least one exchange, it will remain eligible for CAS.

What happens to pending orders?

The exchange outlined operational changes relating to order management. All unexecuted special orders, including stop-loss orders and disclosed quantity orders, will be cancelled. Pending orders that fall outside the revised price band will also be cancelled automatically, and members will receive appropriate cancellation notifications.

Why does this matter for traders?

For many market participants, the biggest implication is that the final closing price may no longer mirror the last traded price visible on trading screens at 3:30 pm.

According to Ashish Nanda, this could require adjustments to trading strategies, particularly for option writers and arbitrageurs who rely heavily on closing prices for valuation, settlement and hedging decisions.

While the derivatives market will remain open until 3:40 pm, the broader shift is not simply about extending trading by 10 minutes. It marks a change in how closing prices for eligible securities are discovered, with the exchange moving toward an auction-based mechanism designed to determine a single closing price at the end of the trading day.

What happens to existing market timings?

Apart from the revised closing time, most trading schedules remain unchanged. The pre-open session in the derivatives segment will continue to begin at 9:00 am and the normal trading session will continue to start at 9:15 am. Similarly, the trade modification window will remain unchanged and continue until 4:15 pm.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)