Sebi panel to mull stock market trading hours extension

An advisory committee of market regulator Securities and Exchange Board of India (Sebi) is likely to discuss a proposal for extending stock market trading hours, even as several brokers feel any such move would increase cost and logistics burden for them.

The stock market in India currently opens at 9 am and closes at 3.30 pm, but there is a view, including among stock exchanges that the trade hours could be extended till up to 7.30 pm to better align domestic trading with global markets.

The proponents of this proposal feel extended hours can help boost trade volumes, thus generating greater revenue for exchanges, and help deepen the equity markets in the country.

The proposal is likely to be discussed by Sebi's Secondary Market Advisory Committee, which is scheduled to meet on Monday. Various proposals on the table include extending trade hours till 5 pm, 5.30 pm and 7.30 pm.

Any change to the trade timings is likely to be made only after a detailed consultation process with all concerned stakeholders, a senior regulatory official said, while observing that the consultation by Sebi's secondary advisory committee would only be the first stage.

The 19-member committee is led by Jayanth R Varma, Professor, IIM Ahmedabad. The members of the committee include representatives of stock exchanges, depositories, brokerage firms, as also independent experts and officials from Sebi and the government.

The panel is mandated to review all developments in secondary market and recommends measures for changes and improvements in market structure.

It also recommends measures for improving market safety, efficiency, transparency and integrity, as also measures for reducing transaction costs.

At present, the markets also have 15 minutes each of pre-open and post-closing sessions within the overall schedule of 9 am to 3.30 pm. Last time, the trade timings were changed in 2009 when opening time was changed from 9.45 am to 9 am.

Exchanges have earlier also proposed to extend the timings, but all such proposals have always met with a strong resistance from brokers while regulator Sebi has so far maintained a neutral stance and wants any move to be based on views of all stakeholders, including bourses and market intermediaries.

"The Secondary Market Advisory Committee of Sebi will meet on Monday to mull, amongst other things, whether to increase market hours. Besides, the Sebi board is scheduled to meet on September 18, for which proposals on table include introduction of weekly stock futures," said VK Sharma, Head PCG and Capital Market Strategy, HDFC Securities

"Both the steps will only add to more speculation. If Sebi really wants to reduce speculation and help investor fraternity to seriously explore the benefits of derivatives, it should start settling the derivatives by actual delivery of shares," Sharma added.

Exchanges feel that technology advancements have made it easier today to successfully follow a longer trading period and the reservations are misplaced against the move that would help better align Indian markets with global ones.

While most major Asian markets open before Indian exchanges, trading in India fails to capture the prevailing trend from most part of the European markets while the trends in the American markets get reflected next morning only, said officials at the exchanges.

There is also a proposal to align equity market timings with that of commodity derivatives which are traded till late evening hours though exact trade timings are different for different commodities.

Some brokers said they would have to call employees in two different shifts for a longer trading period of over 10 hours and all their clients would have to be assigned at least two relationship managers.

"Imagine a scenario when an investor calls in a buy order in the morning at 10 am but wants to place a sell order later at 6 pm. In this case, he will talk to one relationship manager in the morning, but the evening person may not have any idea about the early morning order," one broker said.

"Without extending time and within same time-frame, exchanges can have more volumes as we are on very efficient technology platform. For brokers, there can be an increase in cost with extended time hours without any commensurate benefits," said Arpit Jain, AVP, Arihant Capital Markets.

Metropolitan Stock Exchange of India (MSEI) had earlier announced extension of trading hours in its equity segment from 9 am to 5 pm from July 7.

However, within a day it withdrew the circular.

The Securities and Exchange Board of India (Sebi), in October 2009, had permitted the stock exchanges to set the trading hours between 9 am to 5 pm.