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Market timings extension
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The new SEBI circular allowed the stock exchanges to extend the timings for the Equity derivatives trading to be held till 11.55 pm as compared to 3.30 pm earlier w.e.f. October 1 this year. This, as per exchanges, will allow the traders and investors to be in sync with foreign markets and can respond to the incoming data and news events.

Pros:

The move brought joy for investors who fell it is a step towards aligning the Indian trading time with that of the global markets and capture local and international political, corporate and government events in a timely manner which are often announced after the market hours, thus reducing losses and downside risk.

Currently Indian markets open for the 6.5 hours, the shortest time as compared to markets in France, UK, US and Singapore. But the decision would reduce concerns over shift of funds from India to Singapore to SGX Nifty, the trade timings for which are 16 hours from 6.30 am to 11.30 pm IST as compared to Nifty, trading in which would become available for 14.5 hours.

The longer trading time is also expected to see rise in trading volumes, maximize the amount of capital allocation to the Indian stocks and increase the FDI inflow which declined in the last year, generating greater revenue for exchanges and help deepen the equity markets in the country. The magnitude of fluctuations and economic changes this decision could bring about, can help boost the overall funds flow into the exchanges.

Cons:

The problems arise for the brokers who worry about the increasing costs and logistics burden, fearing they would have to call workers in 2 different shifts and witness an increase in investor advisory costs as well, without much commensurate benefits.

Large fund houses would gain market share from small and medium-sized broking firms due to better and established infrastructure and the ability to cope with increased costs in the form of manpower requirement, handling system capabilities and surveillance systems.

Rise in the working hours would lead to increase in the stress levels and hence brokerage charges or commission which will lead to increase in the overall operational cost for investors. Also, raised trade timings would surge the volatility in the market, adversely affecting the margin requirements for the participants.

There is a view that longer trading hours may make sense for some markets such as currencies and commodities, where overseas markets typically drive price discovery, there is not much of a case when it comes to equities.

Though exchanges believe that technology advancements have made it easier today to successfully follow a longer trading period, actual effects would be seen when the exchanges adopt the extended timings.

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