Sucheta Dalal :BSE NSE defer advancing trading hours till 4th January
Sucheta Dalal

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BSE, NSE defer advancing trading hours till 4th January  

December 17, 2009

 The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Thursday postponed the advancement of market opening time to 9am till 4 January 2010.

On Wednesday, the two exchanges said that the market would open at 9am effective from 18th December, an advancement of nearly an hour from the current practice of market opening at 9:55am.

"Trading will start in the equity segments of the BSE & NSE at 9am with effect from Monday, 4 January 2010," an NSE official told PTI.

In a statement, BSE said, "Based on the market feedback, it has been jointly decided by BSE and NSE that the revision of market opening time to 9am shall be effective from 4 January 2010. In the interim, the current market open timing of 9:55am shall continue."

The market closing time would continue to remain unchanged at 3:30pm.

Speaking about the change in trading timings, Deena Mehta, former president of the BSE and managing director of Asit C Mehta Investment Intermediaries Ltd, said, "It will put a lot of pressure on the system and I am not sure it will benefit anybody. People directly or indirectly associated with the markets will be pressurised to start work early, actually we are taking away a part of their personal time.”

“A lot more homework is required before we move ahead with this. Even the banks are not promising that they would have the Real Time Gross Settlement (RTGS) system running before 9.45am. So in the event of a big movement in prices, there is an issue of how will we be able to make payments," Ms Mehta added.

Some market players believe the extension in timings would help in reducing volatility, improve trading volumes and help catch up with trading in the Hong Kong and Singapore markets.

India Infoline Ltd, in a note said, "Gurus of markets have spoken about the time in the market which is important rather than timing the market. Investors sure will benefit with the extended trading hours. Those directly and indirectly linked to the stock market will start early as trading begins at 9am."

Dinesh Thakkar, chairman and managing director, Angel Broking, said, “While many large brokers are geared up for the additional trading hour, we believe that it is necessary that the whole market should be geared up for the same. The postponement will give the market participants time to put the infrastructure in place and manage the extended trading hours with full planning and preparation.”
Some brokers believe that the trade time extension would solve no purpose as Indian markets would still be behind the Singapore-based bourses.

According to a PTI report, Arun Kejriwal, director, Kejriwal Research and Investment Services (KRIS) said, "It will make life miserable for all those who are trading as there is no way we can catch (up) with Singapore markets as we cannot eliminate the two-and-a-half hour time gap."

During November, BSE has clocked a total equity turnover of Rs1,04,998.70 crore. The total average daily turnover of the BSE is estimated at Rs5,257.10 crore in November. On the other hand, the NSE has registered an average daily traded value of Rs15,170.60 crore with nearly 1,317 securities traded in November 2009. Its market capitalisation stood at Rs50,24,830 crore in October 2009.

Currently, almost all of the Rs80,000 crore worth of derivatives volumes take place on the NSE. In the cash market too, the NSE accounts for 75% of the trading volumes.

SEBI allowed bourses to set their trading hours between 9am and 5pm in October on condition that appropriate risk management systems and infrastructure are put in place. NSE was seen as the big beneficiary of this move, because it was openly concerned over losing Nifty volumes to the Singapore Stock Exchange (SGX), which opens earlier.

The Singapore International Monetary Exchange (SIMEX) trades an NSE-licensed derivatives product on the NSE's Nifty index, named SGX CNX Nifty. Its volumes are driven by foreign institutional investors (FIIs) who trade on the futures before the Indian markets open.

Foreign investors, constrained by the limited ability to participate directly in the Indian equities market after the ban on participatory notes, flock to the SGX Nifty futures product to catch some of the action in Indian markets. Domestic investors in Singapore subsequently take positions on cues from these FIIs. SGX has somewhat stolen NSE’s thunder due to its impressive track record in derivatives and high ethical standards.

With a new team in place at the BSE, the competition is bound to heat up on several fronts. Already, there are open differences between the two bourses on the software for algorithm based trading—the NSE has allegedly refused to grant permission for those algorithm trades, where one of the legs involved transactions on the BSE as well. Interestingly, although James Shapiro of the BSE has made this allegation in public, SEBI, which is seen as being pro-NSE, has made no public attempt to intervene or ensure a level-playing field between the bourses.

The NSE is already at war with the MCX group with litigation in the Bombay High Court (over broker front office software) and before the Competition Commission over transaction charges in the currency market.
— Yogesh Sapkale and Sanket Dhanorkar


-- Sucheta Dalal