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<\/p>\nThe National Stock Exchange (NSE) of India is going to indefinitely defer the internal deadline set for extending trading hours, according to sources in the know.<\/p>\n
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The exchange aimed to introduce a three-hour evening session exclusively for index derivatives by March 2024, contingent upon regulatory clearance from the Securities and Exchange Board of India (Sebi).<\/p>\n
Sources indicate that the market regulator has not provided a favourable indication, dimming optimism surrounding the proposal.<\/p>\n
Allowing longer trading hours would enhance the profitability and volumes of the country’s top bourse, solidifying its position as the world’s largest bourse in terms of traded derivatives contracts.<\/p>\n
Email queries sent to NSE and Sebi remain unanswered until the time of going to press.<\/p>\n
Last month, Sebi chairperson Madhabi Puri Buch said that the proposal to extend trading hours required more consultation with other key stakeholders.<\/p>\n
“There are three categories of stakeholders in the market — market infrastructure institutions, stockbrokers, and investors.<\/p>\n
“Our feedback is that we would take a decision only when we have feedback from brokers and investors,” Buch said at a press briefing following Sebi’s last board meeting on November 25.<\/p>\n
Industry sources suggest that brokers and investors haven’t shown equal enthusiasm towards the proposal compared to stock exchanges.<\/p>\n
“The feedback of investors is most paramount.<\/p>\n
“As long as there is no crying demand from them and other stakeholders, Sebi will not be convinced.<\/p>\n
“They will also have to make noise around it. Currently, it is largely NSE that is pushing for it,” said an exchange executive.<\/p>\n
Earlier this year, NSE submitted a request to Sebi to allow a special session between 6 pm and 9 pm exclusively for index derivatives. Some market players expressed apprehension about the proposal to keep derivatives trading open without the cash market.<\/p>\n
“Some stakeholders think that unless the cash equity segment is also open (in extended hours), single stock options and futures may not make sense.<\/p>\n
“We are taking cautious steps and will test the appetite with basic index derivatives products for three hours,” Sriram Krishnan, chief business development officer at NSE, told Business Standard<\/em> in September.<\/p>\n He also said that the exchange had to address some risk and surveillance aspects before the roll-out.<\/p>\n Several brokers are apprehensive about the proposal, fearing that the increased cost wouldn’t be commensurate with the higher revenues they would generate.<\/p>\n Currently, both the equity cash and derivatives segments are open between 9.15 am and 3.30 pm.<\/p>\n The little over seven hours of trade timings for the $4.1 trillion Indian markets are considered restrictive.<\/p>\n The domestic markets are closed when the European and US markets, considered the main drivers for global equities, are active, putting onshore traders at a disadvantage.<\/p>\n Industry players say Sebi has to walk a tightrope on the proposal to extend trading hours.<\/p>\n “On one hand, there is a genuine need to keep our markets open for long hours to help onshore investors react to global developments quickly.<\/p>\n “On the other, Sebi shouldn’t be seen prompting the derivatives market where gullible investors get drawn in without fully realising the risks,” said an executive with a broking house.<\/p>\n Several global trading venues such as the New York Stock Exchange, Nasdaq of the US, and MOEX of Russia conduct evening trading sessions.<\/p>\n Some bourses such as the Singapore Exchange and CME Group offer almost round-the-clock trading in key equity indices.<\/p>\n Regarding cash market timings, China’s Shanghai Stock Exchange has shorter trading hours than India, while the US has similar timings.<\/p>\n In 2018, Sebi granted in-principle approval to exchanges to extend trading hours in equity derivatives until 11.55 pm.<\/p>\n However, exchanges are required to submit detailed proposals highlighting the risk, settlement, and monitoring framework to Sebi for final approval.<\/p>\n Timing matters<\/strong><\/p>\n Several global trading venues such as the New York Stock Exchange, Nasdaq of the US, and MOEX of Russia conduct evening trading sessions.<\/p>\n Some bourses such as the Singapore Exchange and CME Group offer almost round-the-clock trading in key equity indices.<\/p>\n Regarding cash market timings, China’s Shanghai Stock Exchange has shorter trading hours than India, while the US has similar timings.<\/p>\n In 2018, Sebi granted in-principle approval to exchanges to extend trading hours in equity derivatives until 11.55 pm.<\/p>\n However, exchanges are required to submit detailed proposals highlighting the risk, settlement, and monitoring framework to Sebi for final approval.<\/p>\n\n