NSE plans to extend F&O trading hours; seeks Sebi's nod

The National Stock Exchange (NSE) is looking to increase trading hours in the equity derivatives segment in a phased manner, a move that will potentially curtail the overnight risk arising from global information flow, a senior official said on Monday.

The bourse is planning a session from 6 pm to 9 pm after a break from the closure of the regular session from 9.15 am to 3.30 pm, Sriram Krishnan, Chief Business Development Officer of NSE, told PTI. Further, transactions in the evening session will be in effect included in the trading session on the next business day, he said. Based on the response, a gradual extension of the market timing till 11.55 pm -- on the lines of commodity derivatives -- would be considered, he added.

To begin with, only index derivatives in phase 1 would be available followed by single stock options and others. Additionally, the NSE has submitted its proposal to the market regulator Securities and Exchange Board of India (Sebi) for its approval. ''We are hopeful that we will get quick approval from Sebi on our proposal,'' Krishnan said. Once the exchange receives clearance, preparations will have to be carried out by all stakeholders such as process re-engineering, streamlining of various timelines, etc, before extending trading hours in the Futures & Options (F&O) segment. He said the primary objective for the proposal came from the trading community.

The exchange carried out consultations with various trading members serving different categories of investors across regions, industry associations, and other stakeholders on the proposal for more than nine months. Also, the proposal was discussed in the NSE's trading members' advisory committee. Market experts said extended trading hours would assist in increasing capital formation by enabling more people from India to participate and attract foreign investors to invest and hedge their portfolios with equity F&O.

The proposed measure by the NSE to increase the trading time for the equity derivative segment will help market participants and retail investors. In India, the equity and equity derivatives market close at 3.30 pm when most of the European equity markets would have just opened for trading while the US equity markets would be closed. Indian investors, particularly the small ones, do not have access to markets in global jurisdictions. Such investors are not able to act when information or events take place outside the regular trading hours, which affect the Indian asset prices, particularly equity indices. The longer trading hours in the offshore markets provide an opportunity to incorporate such information when onshore markets are closed.

This would help in onshore price discovery of Indian assets, and investors will get the opportunity to execute their views along with foreign investors when there is any news having an impact on any sector/industry or overall economy. In 2018, the markets regulator allowed stock exchanges to set their trading hours in the equity derivatives segment between 9 am and 11.50 pm. This was similar to the trading hours for the commodity derivatives segment, which are currently fixed between 10 am and 11.55 pm. The move was part of Sebi's efforts to enable the integration of stocks and commodities trading on a single exchange.