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Extension of trading hours for equity markets is now becoming a contentious issue between stock exchanges and brokers.
While stock exchanges feel such a move could put them in positions to fight competition from off-share exchanges and improve their valuation, brokers believe the cost of longer trading hours may far exceed its benefits.
On Saturday, Vikram Limaye, MD and CEO, National Stock Exchange (NSE) and Ashish Chauhan, MD and CEO, BSE, together made a strong pitch for extending equity market trading hours till 11 pm. Both were speaking at a function organised by NSE brokers in Mumbai.
The proposal by the exchange chiefs, made in an open public forum for the first time, took stockbrokers by surprise.
Currently, equity trading in India starts at 9 am and goes on till 3:30 pm.
“Why can’t equity markets trade till 11 pm when commodity markets in India are open till around midnight,” said Chauhan. The thought was seconded by Limaye.
While the BSE was listed this year, the NSE is seeking to launch its IPO early next year.
SEBI, which regulates both stock and commodity markets, has allowed equity exchanges to trade till 5 pm.
Commodity exchanges had been trading from 10 am to 11 pm well before they came under SEBI’s jurisdiction. Stock exchanges believe there is no level playing field between them and commodity bourses.
Officials from both SEBI and the Finance Ministry skipped the event, even though they had been invited. “The cost of trading would far exceed its benefits if trading hours are extended beyond the current limit,” said K Suresh, President, ANMI (Association of NSE Brokers.
“Still, we do not want to oppose it just for the sake of it; a proper study and analysis should be conducted of the costs and benefits of extending trading hours and a decision should be taken only after that,” he added.
Suresh says that trading volumes will get staggered even if timing is extended and hence keeping the markets open till 11 pm may not be feasible.
“Globally, no exchange trades cash equity round the clock but only index derivatives,” said Rajesh Baheti, Alternate President, ANMI.
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