Brokers oppose SEBI's derivatives trading hours extension; all eyes on Friday meet now

The decision by markets and commodities regulator Securities and Exchanges Board of India (SEBI) to extend derivative trading hours till 11.55 pm has drawn opposition from the country’s broker lobby. In a meeting on Friday, brokers are expected to express their discomfort on the extension while discussing various aspects of trading single stock derivatives.

SEBI May 4 allowed domestic stock exchanges to extend timing for equity derivatives trading till 11.55 pm with effect from October 1, 2018.

The brokers are unhappy with the move and seek trading in indices trade till midnight instead. “We have given a detailed presentation on derivatives to the Sebi. It primarily focuses on not extending the trading timing of single future till midnight. SEBI has agreed to meet our representation on Friday,” Rajesh Baheti, President, Association of National Exchanges Members of India told Moneycontrol.

“Nowhere in the world single-stock derivatives trade without cash market availability. Actually, we are required to trade on the basis of world market volatility which requires indices to remain open for longer trading hours,” Baheti said.

A source close to the development told Moneycontrol “In the past, brokers had objected to longer trading sessions for single stock derivatives. However, one of the leading exchanges sought an extension to the timings for single stock derivatives to cater foreign investors,” a source close to the developments told Moneycontrol.

Some brokers fear the extension will increase their costs and not create much of liquidity in the market.

Most brokers that Moneycontrol spoke with believe longer trading hours will not create much liquidity in the market but it will increase the costs of broking houses.

SEBI aims to enable integration of trading in various segments of securities market at par with overseas exchanges. Stock exchanges willing to extend trade timings will have to seek prior approval from SEBI and submit a framework for risk management and settlement process with the regulator.