NSE weighs extending trade timings gradually

MUMBAI : National Stock Exchange (NSE) of India Ltd is considering gradually extending trade timings, currently set at 6 hours and 15 minutes of the regular market, in consultation with its broker members, a top official of India’s largest stock exchange said.

The proposal must be approved by the capital markets regulator and could be extended to derivatives contracts, said Ashishkumar Chauhan, managing director and chief executive, NSE.

“We have already started the consultation with broker members on how to increase trade timings at least in a more convenient way for office-goers in the evening,” Chauhan said after reporting the first quarter earnings on Friday. “They (brokers) are considering that, so hopefully, when there is a conclusion, we will apply to Sebi (Securities and Exchange of Board of India) for their approval. And if their approval comes, we will be able to slowly expand the timing for some of the derivatives contracts at most.”

Currently, the regular trade timing session on NSE and BSE runs from 9:15am through 3:30pm for stocks, following a pre-open session from 9am to 9:15am. Currency derivatives trading on the exchanges runs from 9am to 5pm, while commodity derivatives trading happens from 9am to 11:30pm and to 11:55pm (winters) as many commodities are mirror contracts of those traded on the US CME bourse.

However, any increase in trade timings would be an additional cost burden on small brokers, warned securities lawyer Chirag Shah. He explained that in the event of an extension of trade timings, there would be no single stock futures but index derivatives as offered by the multi-asset class US exchange CME Group, which runs for almost 24 hours covering all time zones. “It would increase the manpower costs for several mom-and-pop broker shops who aren’t so kicked about such a proposal, as far as I’ve heard,” Shah said.

On another investor query on whether NSE faced any pressure from Sebi to change the expiration day of its Bank Nifty weekly options contracts to Wednesday from Friday, Chauhan said the rollback was done at the request of BSE and that there was no regulatory pressure for the same.

“Most people think exchanges are like Coke and Pepsi (that) they have to fight every day, but, actually, 99.99% of the time goes in collaboration and cooperation rather than confrontation.”

BSE changed the expiry day of its Sensex and Bankex derivatives contracts to Friday from Thursday in mid-May this year to increase traction for its derivatives segment. The change was effected so as to not compete with its larger rival, NSE, whose weekly and monthly Nifty and Bank Nifty derivatives contracts expire on Thursday. However, shortly after BSE’s move, which began paying fruit, NSE announced the shifting of its weekly and monthly Bank Nifty expiration to Friday while retaining Nifty expiration on Thursday. This was seen as a move to thwart competition.

After parleys between the two sides, NSE revoked its decision in the interest of “market development” in late June. It has now proposed to shift the Bank Nifty expiry to Wednesday. This led to market rumours of Sebi weighing on NSE to roll back its decision to avoid concentration risk, which Chauhan has denied.

On a query related to the much-anticipated NSE IPO, Chauhan said, “Currently, we don’t have any visibility on the approval process, so as and when Sebi is comfortable, we will come to know, and at that time, we will tell the market.”

The Sebi has challenged a SAT order on the co-location case in the SC, pending which the IPO plans had to be put on the back-burner. The case refers to the exchange under its previous management led by Chitra Ramkrishna, allegedly providing preferential access to certain brokers on its co-location premises. Chauhan also referred to the jump in the NSE International Exchange’s (NSE IX) volumes on the Gift City from $1.3 billion on 3 July to $12.39 billion on 25 July.

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Updated: 31 Jul 2023, 12:21 AM IST

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