It is not only the MSEI that wants longer trading hours for equity markets, but the NSE and the BSE too are keen to extend trading hours. To start with, both the exchanges are thinking of allowing trading in index derivatives for longer hours and aligning it with different time zones to stem the shifting of volumes offshore, officials close to both the exchanges told BusinessLine .

MSEI withdraws circular

There is a view within both the NSE and the BSE that equity trading hours should be longer at least for index derivatives as offshore destinations such as Singapore and Dubai were eating into a large chunk of volumes due to shorter domestic trading hours and lower tax hassles in the overseas destinations.

The MSEI on Tuesday announced that it was extending trading hours for the equity cash segment on its platform to 5 p.m. from 3.30 p.m. But hours later the exchange said it was putting on hold the plan for now. While MSEI is not willing to comment on why it put the move on hold, it is believed that the pause has been effected in order to get further directions from market regulator SEBI.

Supporters of longer trading hours say if commodity markets and the new exchange in Gujarat GIFT City in India can trade for over twelve hours to twenty two hours a day, then why not equities. SEBI now regulates both the equity and commodity markets.

It is argued that domestic retail participants and mutual funds should have a level-playing field as foreign players can hedge their risk in case of global events in Singapore or even the GIFT exchange. A counter argument given by brokers on longer hours in commodity trading is that retail participation in the segment is far less than that in equities.

While the NSE did not reply to an email by BusinessLine , an official said there may not be any major operational issues in extending trading hours but they did not do it till now as the feedback from brokers was negative.

Not much to gain

“Trading hours can be extended if its benefits far outweigh the costs but that does not seem to be the case now,” said Uttam Bagri, Chairman, BSE Brokers Forum. “Trading volumes may not pick up significantly by merely extending trading by a few hours but trades will get staggered over a period of time.”

In his twitter handle, Singapore-based fund manager Samir Arora thrashed MSEI’s move as ‘stupid’ and hoped that BSE and NSE just ignore it.

“BSE associate India International Exchange commenced trading by providing the trading platform for 22 hours a day at Gandhinagar GIFT City, Gujarat, in derivatives for stocks, commodities and currencies.

“Internationally, most exchanges, domestic or international, trade long hours to provide opportunities for investors to transact as and when news take place.

“The BSE has always had a strong regulatory and compliance culture and shall fully abide by regulations as prescribed by SEBI in the interest of the securities market,” the BSE said.

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