The National Stock Exchange, India’s top stock exchange, is looking to start a second trading session between 5:00 pm and 11:55 pm, only for equity derivatives, after the regular session ends at 3.30 pm.
The National Stock Exchange has written to capital and commodity market regulator SEBI, seeking approval to extend the time of equity derivatives trading till nearly midnight, sources told Moneycontrol.
The NSE, India's top stock exchange, is looking to start a second trading session between 5:00 pm and 11:55 pm, only for equity derivatives, after the regular session ends at 3.30 pm.
It is not clear whether trading will be held in single-stock derivatives or only index derivatives in the absence of a cash market during the second session.
In May this year, SEBI had
allowed stock exchanges to hold trading in derivatives between 9 am and 11.55 pm.
NSE accounts for about 90 percent market share in equity derivatives in India. The other major exchange, BSE, has not been known to have applied for an extension in trading times, even though both exchanges tend to align their trading sessions with each other.
Currently, commodities exchanges such as MCX and MCDEX conduct trading in derivatives of some agri and non-agri commodities.
Brokers say
they would resist any move to keep trading open till midnight, as they do not see enough business post regular trading hours to compensate for the additional operating costs they will have to incur.
Plus there are also concerns on how effectively an equity derivatives market will work in the absence of a functioning cash market. A market participant told Moneycontrol, "On the commodity side, SEBI is trying to connect the spot price to the futures price but there will be a disconnect on the equity side, which will close for trading at 3:30 pm."
Many trades, such as hedging or arbitrage, require traders to initiate positions in both the cash and the derivatives market to work effectively.
A source close to SEBI told Moneycontrol that the regulator had "given the option" to exchanges on the issue of extending trading times. "Whether they want to increase it or not, it depends on the exchanges," the source said.
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Source:https://www.moneycontrol.com/news/business/markets/nse-applies-for-extending-equity-derivatives-trading-hours-till-midnight-sources-2758681.html