Market Trading Hours Extension Plan Shelved — Answers To Five Simple Questions
NDTV Profit decodes the SEBI decision and what it means for investors.
The Securities and Exchange Board of India has rejected the National Stock Exchange's proposal to extend trading hours for the derivatives segment. NSE's Chief Executive Officer, Ashishkumar Chauhan, confirmed during a post-earnings call on Monday that there are no plans to increase trading hours, as the market regulator has returned the exchange's plea.
NDTV Profit decodes what this SEBI decision means for investors and what is the likely road ahead.
Why Was NSE Seeking The Extension?
Currently, Indian equity markets trade from 9:15 a.m. to 3:30 p.m. India's largest stock exchange has proposed to extend the trading hours from 6 p.m. to 9 p.m. following a break after the regular session closure. Moreover, in subsequent stages, the timings are planned to be extended until 11:30 p.m.
This move was undertaken to potentially reduce overnight risk arising from global information flow. The extended trading hours would assist in increasing capital formation by enabling more people from India to participate and attracting foreign investors to invest and hedge their portfolios with equity futures and options.
What Was SEBI's Decision?
The markets regulator returned the proposal to the stock exchange because the stock brokers did not provide the feedback that SEBI was seeking, according to Chauhan.
What's The Rationale Behind Not Changing Trading Hours?
SEBI established an industry standards forum to gather feedback from all stakeholders regarding the proposed trading hour extension. Stock brokers objected to the move, resulting in the decision to maintain the current status quo.
Brokers have been hesitant to support this change due to concerns about increased costs and technological requirements, as noted by Chauhan.
Is The Door Closed For Future Extension?
SEBI's decision does not imply that there will be no future extensions. The regulator has not rejected the proposal; instead, it has returned the application to NSE, and currently, the proposal is on hold.
In the future, if technological advancements reduce compliance costs, there may be an opportunity to submit a new application.
What Are The Potential Next Steps?
To extend market trading hours, the next step for NSE will be to consult brokers again to address their demands. Following this, they will file a fresh application with the market regulator.
