Share trading, too, will be a 9 to 5 job now

The Securities and Exchange Board of India (Sebi) has  allowed stock exchanges to extend their daily trading period by two-and-a-half hours.

Trading can now be done for up to eight hours, between 9 am and 5 pm, a Sebi circular said on Friday.

Currently, both the cash and derivatives segments of the exchanges start at 9:55 am and close at 3:30 pm. The commodity markets are open from 8 am to 11:30 pm.

Following the Sebi go-ahead, the National Stock Exchange plans to announce the extended timings at the earliest, a spokesperson said. “As you are aware, the timings would be in line with currency markets and as such we shall be able to start soon,” he said.

Bombay Stock Exchange, too, welcomed the announcement.

The move is seen increasing the workload of brokerages and putting their existing infrastructure under strain. Experts say brokers would be hard pressed to send contract notes, which are confirmations of trades carried out during the day, within the allotted time.

“Currently, contract notes have to be generated in 24 hours. With the current system, it takes as long as 7:30 pm or 8:30 pm before it is done. By extending trading hours to 5 pm, processing will not be completed before 10 pm, making it difficult to meet the one-day deadline,” said Mayank Shah, CEO of Anagram Capital.

Transfer of funds through banking channels might also be a problem. Currently the real time gross settlement (RTGS) system is available from 9 am to 4:30 pm, which is half-an-hour short of the permitted extension for stock exchanges.

“The banking system is still not developed enough to cope with extended market hours. Funds transfer through RTGS is difficult after 4 pm. Regulators could coordinate to address the issues that this would pose in banking,” Anand Rathi, chairman, Anand Rathi Financial Services, said.

Will it improve volumes? Analysts say half of the day’s volumes come in the first and last hour of trade. “So the middle ground will be more widely dispersed,” an analyst said. “It’ll also improve the business of ophthalmologists and spine doctors,” he added in a lighter vein.

The discussion paper on the topic put out by Sebi had pointed out that extending the market hours would help investors react in a timely fashion to global news flow and help India match international standards and practices.

There had also been requests from the exchanges to extend the market hours and the Sebi discussion paper observed that doing so “would enable market participants to execute trading strategies in Indian markets based on information flowing in, which otherwise would have been executed outside India.”

Currently, Nifty futures are traded from 6:30 am to 1:30 pm in the Singapore Stock Exchange, raising concerns of volumes in Indian securities fleeing abroad due to better alignment with timings in major markets.

Asian markets are currently ahead of the Indian time zone, while activity in European and American markets extends beyond the Indian market timings.

Some brokerages had suggested bringing the timings in line with the more developed markets, while denying that they would be affected by the longer hours.

“We are used to extended trading hours since the commodity market is open for a far longer time than the equity one. A number of institutions are based out of America. If the change had taken their time into account, then lots of new investors would have come into the market,” Dinesh Thakkar, CMD, Angel Broking said.