The National Stock Exchange (NSE) is considering extending the trading hours for index derivatives by three hours, potentially starting from March next year. This move aims to accommodate Foreign Portfolio Investments (FPIs), as indicated by an NSE official. However, the extension is subject to approval from the Securities and Exchange Board of India (SEBI), for which NSE has already filed a proposal weeks earlier.
A working group formed by India’s largest stock exchange has submitted a proposal to allow trading in index derivatives between 6 pm and 9 pm. National Stock Exchange The proposal is currently awaiting final approval from SEBI, after nine months of consultation with stakeholders.
National Stock Exchange India
“Once the regulator gives approval, we would like to give reasonable time to the market to get ready for this. Overseas investors remain on leave at the end of the year, National Stock Exchange India particularly FPIs, so we do not want them to get into any pressure situation. We hope to go live in the current financial year,” said Sriram Krishnan, Chief Business Development Officer at NSE.
Additionally, the NSE official mentioned that certain risk and surveillance aspects need to be addressed before the extension can take place. The process details will also be communicated to stakeholders after obtaining the regulator’s approval.
Another important factor for a successful extension is the inclusion of Indian Clearing Corporation, a subsidiary of BSE. The sources suggest that the agreement of both clearing corporations will be crucial, given the norms for interoperability established by the market regulator.
Experts believe that the extended trading hours could bring more arbitrage opportunities for traders.
National Stock Exchange Nifty
“Some stakeholders are of the opinion that unless the cash equity segment is also open (in extended hours), single stock options and futures may not make sense. National Stock Exchange Nifty We are taking cautious steps and will test the appetite with basic index derivative products for three hours,” said Krishnan
The market regulator had already allowed exchanges to extend the trading hours until 11:55 PM. However, these plans have been on hold for a significant period of time.
National Stock Exchange Index
While the NSE’s unit in the International Financial Services Centre (IFSC) offers trading for approximately 22 hours, the unit catering to domestic investors is only open for six hours a day.
Given that the IFSC unit does not allow domestic retail participation, NSE intends to offer extended trading hours to provide a window of National Stock Exchange Index opportunity for traders to hedge portfolio risks in response to significant developments in the US and global markets, according to the official.
Stockbrokers and market intermediaries have welcomed the plans, stating that technological advancements will reduce the need for additional employees during the extended trading hours.