Solvent extractors Association opposes extension of trading hours for commodity derivatives

By: | Updated: December 5, 2018 12:59 AM

The letter was in response to Securities and Exchange Board of India’s (Sebi) notification proposing extension of trading timings on exchanges.

He added that the extended trading hours will also increase the operating cost of stakeholders as they will have to engage additional staff to monitor the market movements after the close of business hours.

The Solvent Extractors Association of India (SEA) has written to markets regulator Sebi stating that the current trading time is good enough and there is no need to extend the trading time requesting Sebi to reconsider the decision. The letter was in response to Securities and Exchange Board of India’s (Sebi) notification proposing extension of trading timings on exchanges.

In a representation submitted to Sebi, SEA stated that agriculture produce business in the physical market like APMCs takes place upto 5 pm and no physical trade takes place after business closing hours. Further, major auctions take place in the morning between 10 am to 12 noon and no trading activity takes place thereafter. Hence, if futures market is allowed beyond 5 pm, it can seriously distort prices, BV Mehta, executive director,SEA said.

Mehta said that trading hours in most commodity exchanges like BMD, CBOT, CDE and NYMEX is 4-5 hours only per day and that too with adequate interval, unlike the proposed 12-hours for our commodity exchanges. He added that the extended trading hours will also increase the operating cost of stakeholders as they will have to engage additional staff to monitor the market movements after the close of business hours.

The objective of the extension may be to increase volumes at the domestic exchanges. However, until the banking hours are also extended to match the trade, chances are that speculators may have a free run in manipulating the markets after the close of normal business hours, Mehta opined, adding that our markets are still in infancy and low volumes encourage manipulation.

SEA members have opposed the extension of this timing as they feel it is totally uncalled for and capable of creating serious distortions in the smooth flow of business.

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