Extended Trading Hours – What Does It Mean for Traders and Brokerages

The Securities and Exchange Board of India (SEBI) in 2018 had enabled a framework under which Stock exchanges in India could extend the trading hours for derivative trading hours till 1155 pm. Recently the National Stock Exchange announced its decision to extend the trading hours for one of the derivatives segments in India. Effective Feb 23, 2023, the market trade timings for interest rate derivatives will be extended to 5pm by the National Stock Exchange of India. 

Its also been reported that NSE is in consultation with market participants regarding extension of F&O trading hours until 11:55 pm and equity trading hours too. This move is in largely in view of the trading community and the exchanges that trading volumes are moving offshore due to restricted trading hours on Indian bourses.Industry experts believe that this may impact the personal lives of traders outside of their trading activities.

So, what are the implications of longer trading hours and what does it mean for traders, investors, retail participants, and the Indian stock market? Let’s find out.

What are the current trading hours on NSE and BSE?

Currently, for the cash segment on NSE and BSE and the NSE F&O segment, the trading hours are 9:15 am to 3:30 pm.

After a pre-opening session from 9 am to 9:15 am, active trading on NSE and BSE happens for 6 hours and 15 minutes, beginning at 9:15 am and ending at 3:30 pm. Rumours suggest that the NSE now wants to increase the closing time by 1 hour 30 minutes till 5 pm.

The market timings of the currency derivatives segment on NSE are 9 am to 5 pm. On the other hand, commodity markets trade for 15 hours from 9 am to 11:55 pm.

Comparing Indian and global market hours

The table below offers a quick comparison of Indian market hours versus global stock exchanges:

	Timings	Duration
Shanghai Composite Index	9.30 am to 11.30 am 1 pm to 3 pm	4 hours
Tokyo Stock Exchange	9 am to 11.30 am12.30 pm to 3 pm	5 hours
National Stock Exchange	9:15 am to 3:30 pm	6 hours 15 minutes
Bombay Stock Exchange	9:15 am to 3:30 pm	6 hours 15 minutes
New York Stock Exchange	9.30 am to 4 pm	6.5 hours
London Stock Exchange	8 am to 12 pm12.02 pm to 4.30 pm	8 hours 28 minutes
Euronext Paris	9 am to 5.30 pm	8.5 hours
Frankfurt Stock Exchange	8 am to 10 pm	14 hours

Implications of longer trading hours

What are the implications of longer trading hours for traders and retail investors? Will this mean higher trading volumes and improved access to global markets or will it pose more challenges for traders? Let’s take a look at some of the pros and cons of potential extension in trading hours.

Higher trading volumes

One of the primary implications of longer trading hours could be a rise in trading volumes. The extended hours provide more opportunities for traders to enter and exit the market, leading to more activity and liquidity in the market. This can be beneficial for investors looking to buy or sell large volumes of securities.

Better accessibility to global markets

With longer trading hours, Indian traders and investors can participate in global markets during their trading hours. This can help traders take advantage of market movements and news from global markets, leading to improved investment opportunities.

Impact on traders and retail investors

Longer trading hours can also pose challenges for traders. This could mean longer work hours for monitoring the market, which can lead to burnout and fatigue in the long run. Additionally, extended trading hours can lead to higher transaction costs due to the increased volatility during these hours.

How do the brokerages get impacted?

The extended trading hours can have both positive and negative effects on brokerages. On one hand, brokerages can benefit from increased trading volumes and transaction fees. On the other hand, longer trading hours can lead to higher operational costs for brokerages, such as additional staff and technology infrastructure.

Conclusion

In conclusion, while there may be some benefits to extending trading hours in India, such as reducing overnight market risk, the evidence from other exchanges is mixed, and there may be disproportionate costs for all participants. Furthermore, longer hours may not significantly aid retail investors in hedging against global volatility. Overall, any proposal to extend trading hours should be carefully considered in terms of its potential impact on all stakeholders.

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