Leading bourses BSE and NSE hailed Sebi's decision to extend trading hours for equity derivatives contracts till 11:55 pm from October 1, terming it as the logical step towards a universal exchange model and bringing parity between equity and commodities trading.
Currently, trading in equities, both derivatives and cash, is allowed from 9:15 am to 3:30 pm, while international investors get to trade up to 11:55 pm in equity derivatives. On the other hand, commodities derivatives are traded till 11:55 pm now by both domestic and international investors.
Welcoming the Sebi move, BSE chief Ashishkumar Chauhan said, "Introduction of the extended trading hours is a positive development and will bring domestic market in line with international markets and domestic commodity derivative markets."
He noted that globally, the derivative exchanges are already following the extended trading hours.
Echoing similar views, Vikram Limaye, the managing director of NSE, which dominates the derivatives market volumes, said the move is good for the markets in general and for the domestic investors in particular, who substantially control the volume.
"Since commodities space is already trading into midnight, this is another step towards the universal exchange model. In short, the Sebi move is a logical step towards this," he told PTI.
He further said, "The biggest advantage from an investor's perspective is that this will help him/her hedge the positions, an advantage that is at present available only to foreign investors. Our investors are sitting on open positions as of now, unable to do anything, be it a good or a bad market announcement."
He also said volume is likely to go up from October 1.
Earlier in the day, a Sebi circular said, "It has been decided to permit stock exchanges to set their trading hours in the equity derivatives segment between 9.00 am and 11.55 pm effective October 1, 2018."
The extended timing is similar to the trading hours for the commodity derivatives segment which are fixed between 10.00 am and 11:55 pm and is part of Sebi's efforts to integrate stocks and commodities trading on a single exchange.
The extended timing has been a long pending demand from exchanges and domestic institutional investors as it will bring domestic markets in line with their international peers and increase the market depth.
According to Sebi, the permission is subject to stock exchanges and clearing corporations have in place risk management system and infrastructure commensurate to the trading hours.
In case stock exchanges plan to extend the trade timings beyond the extant trading hours, they would require prior approval from Sebi, the regulator said.
Sanjit Prasad of Indian Commodity Exchange (ICEX) said the Sebi move will help increase market depth with all segments now offering an equal and better opportunity. It will also mitigate risks for investors.
However, Rajesh Baheti, president of ANMI (Association of National Exchanges Members of India) cautioned that extended trading hours should be restricted to index derivatives alone and not cover individual stocks, as they may be vulnerable to abuse by unscrupulous elements.
The decision comes after the Sebi board had last December announced the much-awaited integration of stocks and commodities trading on a single exchange from October 2018.
Currently, commodity derivatives are traded on separate exchanges, which include MCX and NCDEX.
In the budget 2018, finance minister Arun Jaitley had said equities and commodities derivative markets would be integrated further by integrating the participants, brokers and operational frameworks.
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