In a recent development, the Securities and Exchange Board of India (SEBI) has declined the proposal put forth by the National Stock Exchange (NSE) to extend market trading timings for the derivatives segment. This decision comes after NSE’s attempt to expand trading hours beyond the current schedule.
Why Did NSE Seek the Market Trading Hour Extension?
Currently, Indian equity markets operate from 9:15 a.m. to 3:30 p.m. The NSE proposed extending trading hours from 6 p.m. to 9 p.m. post a break following the regular session closure, with further plans to extend trading until 11:30 p.m. This initiative aimed to mitigate overnight risks stemming from global market movements and foster capital formation by attracting more domestic and foreign investors to participate in equity futures and options trading.
SEBI’s Decision and Rationale
SEBI returned the proposal to NSE, citing a lack of satisfactory feedback from stockbrokers, according to NSE CEO Ashishkumar Chauhan. The regulator sought input from industry stakeholders through an industry standards forum, where stockbrokers expressed reservations due to additional costs and technological requirements associated with extended trading hours. Consequently, SEBI opted to maintain the status quo.
Future Prospects for Market Trading Hours Extension
While SEBI’s decision halts the immediate plans for Market Trading Hour Extension, it does not definitively close the door for future proposals. The regulator’s action signifies a temporary shelving of the proposal rather than outright rejection. NSE may revisit the idea in the future, especially if advancements in technology can address compliance costs and broker concerns.
Potential Next Steps
In the wake of SEBI’s decision, NSE’s next course of action would involve engaging with brokers to address their apprehensions and gather support for a revised proposal. Once the concerns are adequately addressed and a consensus is reached among stakeholders, NSE can then file a fresh application with SEBI, potentially paving the way for market trading hour extensions in the future.
In summary, while the immediate plans for Market Trading Hour Extension have been put on hold, the possibility of revisiting this proposal remains open, contingent upon addressing stakeholder concerns and technological advancements to streamline compliance processes.
