Equity derivatives get extended hours

MUMBAI: Market regulator Sebi has allowed stock exchanges to extend trading in equity derivative markets by more than eight and half hours, which is expected to bring back a chunk of volumes cornered by some of the overseas derivative exchanges.

“It has been decided to permit stock exchanges to set their trading hours in the equity derivatives segment between 9.00 AM and 11.55 PM, similar to the trading hours for commodity derivatives segment,” Sebi said.

Currently, trading in equity and equity derivative markets are allowed from 9.15 am till 3.30 pm.

The regulator has asked bourses and clearing corporations to put in place adequate risk management system and infrastructure commensurate to the trading hours.

While seeking prior approval from Sebi for extending their trading hours, stock exchanges have been asked to submit a detailed proposal regarding the framework for risk management, settlement process, monitoring of positions, availability of manpower, system capability and surveillance systems.

“It is a very good move as it will bring Indian exchanges in line with the global markets where extended hours are provided for futures trading. One of the positive impact would be reduced volatility in the underlying market as investors don’t have to wait for a longer time for price discovery,” said Deven Choksey, MD of K.R.Choksey Securities.

The move comes after the Sebi board in December announced much-awaited integration of stocks and commodities trading on a single exchange from October this year.

Currently, commodity derivatives are traded on separate exchanges, which include MCX and NCDEX.

Meanwhile, both BSE and NSE hailed Sebi’s decision to extend trading hours for equity derivatives contracts, terming it as the logical step towards a universal exchange model and bringing parity between equity and commodities trading.