If you are a trader in equity derivative segment, then there is some good news for you. Securities and Exchange Board of India (SEBI) has recently approved the extension of equity derivatives trading till 11:55 PM from 1st October onwards. Therefore, trading in equity derivative shall take place from 9:00 AM to 11:55 PM.
The extension of time is to bring integration of the different segments of the securities market with the global market. Like, if there is a big global event after the market hours, the trader currently have no option to hedge his risk until the market opens. But with the extension of time, the traders can hedge their positions in equity derivatives if any event takes place at late night.
The longer market hours shall further help in the integration of the equity derivatives with the commodity derivatives. Globally, the derivative exchanges already follow extended trading hours. Thus, an extension of Indian equity derivatives can be said to be a good move and must be welcomed. In addition, SEBI is further discussing the extension of timings of other products as well.
However, before extending the market hours the exchanges will require prior approval of the SEBI. Furthermore, the exchanges will be required to submit a detailed proposal with the reason for extension in timing. The detailed proposal shall include a framework for risk management, settlement process, monitoring of positions, availability of manpower, system capability, and surveillance systems.
The extension of trading hours in the equity derivatives segment will lead to an increase in volume for BSE and NSE. So it would not be surprising to see an extension of market hours right from 1st October 2018. Further clarity on the issue shall help the exchanges to take an appropriate decision. Also with the extension of market hours the relevance of SGX Nifty shall decrease because the market cues can be taken directly from the equity derivative segment.
To sum up, the coming days would be very interesting as we can see many developments and progress in regard to the extension of the timings of the stock market beyond the market hours.
Short Note by NTA®
Also Read: Meaning of Derivative Market