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  1. Brokers losing sleep over SEBI’s extended derivatives trading hours, but some welcome the move

Brokers losing sleep over SEBI’s extended derivatives trading hours, but some welcome the move

Prominent brokers have offered mixed reactions to SEBI's decision of extending derivatives trading till 11:55 pm, with some welcoming the move, whereas others slamming it.

By: | Published: May 4, 2018 7:24 PM
SEBI on Friday allowed BSE and NSE to extend the trading hours in the equity derivatives segment from 9 am up until 11:55 pm.

Prominent brokers have offered mixed reactions to SEBI’s decision of extending derivatives trading till 11:55 pm, with some welcoming the move, whereas others slamming it but agreeing that longer working hours would require a lot of investment in human resources. In the major development on Friday, India’s capital market watchdog Securities and Exchange Board of India allowed exchanges (BSE and NSE) to extend the trading hours in the equity derivatives segment from 9 am up until 11:55 pm.

While Dipan Mehta, a veteran Indian stockbroker, opposed the move, saying that it will lead to more speculation and volatility and that it was unnecessary, Deven Choksey, another well-known stockbroker, said it will give an opportunity for taking important positions, and will also encourage the introduction of more structured products.

The aftermarket hours trading in the derivatives segment is practised in various parts of the world including the United States. The derivatives on equity and indices listed on the NYSE and Nasdaq are traded after market hours.

Rajnikant Patel, former MD & CEO, Bombay Stock Exchange told CNBC-TV18 that he does not see any possibility of cash trading being extended up to the this as because settlement issues can be found in the underlying cash is not available until that time.

“I think indices trading the extension, is just the extension of time there won’t be major tech improvement is required. For settlement purposes maybe the exchanges will have to tweak their present rules, maybe look at a little bit one or two issues here and there in terms of settlement guidelines,” Rajnikant Patel said.  He, however, said that there could be some issues on the ground “in terms of the extension of manpower and having the technology being made available for longer working hours”, he said.

The good part of the SEBI decision is that they have segregated the cash market with the derivatives and future market, Deven Choksey, MD, KR Choksey Shares & Securities said. Any important positions that one wants to take after market hours are now available — the window is open, even for domestic investors, Deven Choksey told the news channel. The extension in derivatives trading hours will require an investment in HR from a broker’s standpoint and there is no doubt about it, he added.

However, Dipan Mehta, Member, BSE & NSE, did not see the move in the right direction and feared that it will encourage more speculation in the market and infuse greater volatility. “… The cash markets won’t be open and derivatives market will be open, it will encourage more price-volume volatility,” Dipan Mehta told ET Now.

Taking a dig at the development, Dipan Mehta said that the markets were working quite smoothly, that we were reacting to overseas news in a more rational manner. He said that extending derivative hours was not required as no other major global markets such long hours either.

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