Sebi nod for 9-5 trading day

Indian stock market will soon witness longer hours and higher volumes. In a move that will give investors more flexibility but make life in the dealing room and back-office far more demanding, capital market regulator Sebi has permitted stock exchanges to begin the day as early as 9 AM and keep the market open for trading till 5 PM. Currently, trading in stocks and equity derivatives take place between 9:55 AM and 3:30 PM. While the exchanges are yet to fix the timings, the decision to align the timings of the stock markets with other financial markets like currency, bonds and call money may boost volumes in stocks and equity derivatives. More interestingly, if the local market opens at 9 AM, it may drive a slice of the trading volume from Singapore, where the Nifty futures are traded, to India. Since operators shorting a stock often use the shallower Singapore market to drag down the scrip in India, an early opening will lower the scope of such manipulations. A senior NSE official said that the exchange is likely to extend the trading hours ‘soon’. “The exchange is conducting a review to ensure that systems are compliant with Sebi requirements. We do not anticipate any issues in starting soon,” the official said. A BSE spokesperson said the exchange welcomes the Sebi directive on extension of trading hours, though he declined to comment on when it plans to implement it. Extended hours may benefit only day traders, feel analysts . The origin of the proposal to extend trading hours has its roots in an increased interest among FIIs and overseas arbitrageurs in Singapore Nifty futures. Nifty futures on the Singapore Exchange are available to global investors at least a couple of hours before trading starts in Indian markets. This has resulted in overseas investors gaining an upper hand over local investors, who do not have access to Singapore Exchange, to react to global events and volumes shifting from NSE’s equity derivatives segment to Singapore. The move is seen benefiting NSE the most in the foreseeable future, as it already enjoys a healthy lead over rival BSE in volumes, thanks to its robust equity derivatives segment. Market watchers fear this may widen the gap between the two exchanges. Even as brokers are enthused about the prospects of higher business, there are some concerns over the extra burden that the additional trading hours will exert on their post-trade infrastructure and client servicing. Derivatives analysts dread the extension of trading hours, as it may result in further delay in receiving the bhavcopy for equity derivatives, which is the list of the final details of trading in a day, from the exchanges. The bhavcopy is released by exchanges by around 6 PM, after which, the data is analysed and sent to clients.

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