In what could result in a big change in the way the stock trading happens in India, market regulator SEBI has held first round of discussions with stakeholders on extending trading hours, ET Now reported on Thursday citing unidentified sources. Albeit, the report also said that no immediate decision is expected on the extension of trading hours and that SEBI will consider it only after wider consultations.
The murmurs of longer share market trading hours have resurfaced time and again this year, with the stock exchanges even reportedly mulling extending trading hours to as late as 5.30 pm, or even till 7.30 pm in the evening, as against the current practice of ending the day at 3.30 pm.
However, ET Now report said that there is no consensus yet between BSE and NSE on the issue. Further, SEBI is also exploring the option of keeping the index open but closing the cash market, the report said.
Earlier July, the Rakesh Jhunjhunwala- and Radhakishan Damani-backed smaller exchange Metropolitan Stock Exchange of India had floated a circular announcing extending trading hours to 5 pm, but later withdrew it after both the bigger rivals BSE and NSE largely ignored the move.
TV news channels had reported in August that the capital market regulator SEBI (Securities and Exchange Board of India) is “in-principle” on board with the plan to extend the trading hours, but the broker community is yet to be brought on board by the stock exchanges. The brokers are apprehensive of the potential move, which, they believe, may result in a hike in the overhead costs, the report added.
Extension in trading hours has traditionally in the past met with opposition from brokers. In July, when Metropolitan Stock Exchange, the erstwhile Jignesh Shah-promoted MCX-Stock Exchange, said it will increase trading hours till 5.00 pm, Samir Arora, founder and fund manager of Helios Capital Management, had called the move “stupid” in a tweet. “Desperate move by a desperate exchange,” Samir Arora had posted in the tweet, adding that he hoped that NSE and BSE ignore it.
MSEI had done so ostensibly in order to gain volume and market share. Notably, MSEI is a very small player with only a little over 200 companies listed on it, in a market dominated by NSE in cash and derivatives and by BSE in terms of breadth and experience. NSE commands over 80% of the equity cash and equity derivatives market, with BSE controlling 14%.
Few years ago, both, BSE and NSE had extended trading hours in the morning to begin at 9.15 am with the pre-opening session opening at 9.00 am, from 9.55 am earlier, after SEBI allowed them to extend working hours from 9 am to 5 pm. Even that morning extension of trading hours at that time had met with a lot of opposition from brokers, who were more comfortable with the existing schedule.