The securities market regulator SEBI’s proposal to advance the commodity derivatives market trading hours by one hour to 9 am and to allow agri-trading till 9 pm (that is, extending by four hours) has generated unseemly and weakly justified objections from a section of the trade.

While some are objecting to long working hours and consequent impact on health, others say the extended working hours will be not in alignment with the timings of the physical market at APMC mandis and with commercial banks.

Specious as they are, the objections ignore the grand idea that this market should gradually be moving towards 24-hour trading. Extension of time to 12 hours trading is a step in the direction.

Policy-makers in New Delhi and SEBI are keen to deepen and widen the market. New products are being introduced and new participants are being attracted. Longer trading hours is a natural corollary. As the Indian economy integrates with the global economy and Indian commodity market integrates with the global market, participants — hedgers and investors — must have a global, or a 360 degree view, of developments. Markets around the world will move regardless of what India does or Indian market participants do.

Hedging and risk management for value-chain participants must get primacy and this is what the extended timing does. It is absolutely necessary that value-chain participants covering primary producers, processors, industrial consumers, importers and exporters as well as associated others have access to markets as long as is currently feasible. Surely, Indian market takes cues from overseas markets. TOCOM (Tokyo exchange) and BMD (Malaysia exchange) open a few hours ahead of Indian bourses; and prices on those exchanges impact India’s opening price of commodities relevant for Indian hedgers. For example, rubber and palm oil. Likewise, New York opens at 7 pm India time, well after India’s current closing hours.

To be successful in managing price risks, commodity market participants have to be fully tuned and synced to global market developments. Importantly, extended trading hours will encourage some of the large corporate houses that currently trade in overseas bourses to come into the domestic market for risk management.

That trading hours in Indian exchanges must align with APMC market timing is another facile view that betrays a lack of understanding of the ground realities. Those in the physical market — whether processors, industrial consumers, importers, exporters or domestic traders — continue to trade (buy and sell) virtually 24x7 irrespective of exchange timings. And, to suggest that such hedgers’ risk management facility should be restricted to a ‘10 am to 5 pm’ time schedule would be absurd. Their trading hours are not aligned to APMC markets or banking. Physical market trading happens continuously and seamlessly.

The proposal to trade on Saturdays is another vexatious issue which has been objected to by some participants including brokers. But a large number of value-chain players are in favour of the trading terminal being open on Saturdays perhaps with slightly reduced timing.

Extended trading hours would likely generate more jobs, too. Brokerages will have to get out of their ‘comfort zone’ and redesign their internal systems to work in two shifts.

The writer is a policy commentator and commodities market specialist. Views are personal

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