MUMBAI: Capital markets regulator Sebi on Friday allowed stock exchanges to extend trading in equity derivatives to bring the timings in line with commodity markets and international markets. Currently, trading is allowed for a little over six hours from 9.15 am to 3.30 pm. Starting October, exchanges will be permitted to trade in equity derivatives for more than eight hours, over and above the six plus hours permitted now, i.e., between 9 am and 11.55 pm.
The decision is aimed at integration of various trading segments of securities market as stock exchanges have been permitted to trade commodity derivatives along with other segments of securities from October 1. “Globally, the derivative exchanges are already following the extended trading hours. The introduction of the extended hours is a positive development and will bring Indian markets in line with international market and Indian commodity derivative markets,” said Ashishkumar Chauhan, MD & CEO, BSE. But first, bourses seeking to extend their trading hours have to obtain approvals from Sebi after submitting detailed proposals, including the framework for risk management, settlement process, monitoring of positions, availability of manpower, system capability and surveillance systems.
The move not only aligns Indian markets with their foreign counterparts, but also helps avoid trading volume loss as investors are deprived of opportunities when other markets are open. Investors will also get an opportunity to trade or hedge portfolios systematically. However, it’s unclear if the move will spur volumes and contain volatility.
“The move will align commodities market timings. However, we will have to wait for exchanges to implement the same with prior approval from Sebi. Whether the extended timings will be for all securities or securities in equity derivatives market will trade only till the time underlying equities trade and only indexes will be allowed to trade for extended hours,” said Ashish Rathi, Head of Compliance and Whole-time Director, HDFC Securities.