Extension of trading hrs premature: ANMI

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In an interview to CNBC-TV18, Gopal K Agarwal, Director of Association of National Exchange Members of India (ANMI), spoke about the extension of market trading hours.

Below is a verbatim transcript of an exclusive interview with Gopal K Agarwal on CNBC-TV18. Also watch the accompanying video.

Q: You are conducting a preliminary sort of survey amongst a lot of your members and brokers on what their views are on this extension of trading hours. What is the preliminary analysis from that and when will we have a final verdict?

A: An online survey is being conducted by the association to gauge the opinion of the member broker and the investors at large because even the brokers have been asked to get the opinion of their clients. Earlier also a limited sort of survey was conducted and we found that the opinion is very much divided on the issue as people think that extension of trading time will be slightly premature. The major cause of concern for the brokers and the investors is the payment in the banking system. At present, it is not synchronized with the payment at the exchange level because with the geographical reach of the brokers and investors public at large, in all remote areas, rural areas, the banking industry is not capable of transferring those funds online. The margining system in the derivative segment, which is online basis and the concept of value at risk where volatility factor is inbuilt in the margin calculation, if the client has any particular position and the market becomes volatile, there will be further margin calls for the same position. If his banking payment is not seamless with the broker then finally his position is prone to be squared off to the exchange. In this kind of situation, the momentum further creates volatility in the market and leads to more margin calls. So that becomes a scary situation which we have seen in the past.

Q: Is the survey over? Is this the final answer or feedback you have got from brokers?

A: No, the result of the survey is not yet out. The online survey is going on and we may hope to get the result by today evening or will compile by tomorrow.

Q: If the majority does not want it, will National Stock Exchange (NSE) not introduce extended trading hours soon?

A: It is not a question of whether we want it or not. The ground reality does not support it. We may want the extended time, it is good for the international scenario but the ground reality of payments and the timings after 5pm when all processing will be done, client payment will be required to be called and then before 9am next day - clients' payment will not be able to reach the exchange.

Q: Can there be a variation of this maybe 9.00am to 3.30pm or 9.00am to 4.00pm bringing back the actual closing timing? Is there some sort of a variation that you all maybe discussing?

A: It is the morning time, which is more hurting because if the market closes at 5.00pm, the processing at least will take two to two and half hours in the back office then you give a call to the clients to make their payments and in the morning banks do not open before 10.00am.