Diverse views among broking community on extended trading hours, says Madhabi Puri Buch

Buch wasn't sure about the timeline of implementation of extended trading hours.

There are very divergent and diverse views in the broking community about the National Stock Exchange's extended trading hours, said Sebi Chairperson Madhabi Puri Buch on January 29.

The broking community is a divided house and a lot of discussions are going on currently about the extended trading hours, Buch said at a Brokers Industry Standards Forum (ISF) event. She said that the ISF would be reaching a conclusion on the same within a reasonable timeline. Buch however wasn't sure about the timeline of the implementation of the extended trading hours.

The Sebi Chairperson said that three stages for extended trading hours must be considered. The first stage is taking into consideration what the market infrastructure institutions (MII) think, the second stage is considering what the brokers think, and the third stage is decoding investors' feedback. Buch said that the ISF needs to consider all three before finalising the NSE's extended trading hours.

Why different views?

Buch said that systems at the exchanges carry out huge transactions and require maintenance at the end of the day. From time to time, systems also require maintenance for doing migration, upgrades, and adding functionality, among other tasks, said Buch.

Speaking hypothetically, Buch said that if exchanges had to carry on transactions for 24 hours, it would be like changing tyres on a Formula 1 track without even going to the pitstop.

Buch had earlier said that a final decision on extended trading hours would be taken after receiving feedback from a wider set of market participants. The NSE was aiming for extended trading hours by March 2024.

The proposal is to extend trading hours for index futures from 6 pm to 9 pm. The settlement of these trades would be clubbed with the next day's main session. The exchange is of the view that additional hours in the evening would hedge portfolios from global events.

Issues with extended trading hours

Smaller brokers fear that volumes will be lower initially while costs on the other hand will rise. The window between 3.30 pm to 6 pm is too short to settle the trades and create fresh files for clients for the evening session.

Another concern is that extended hours would generate a lot of volatility, as the underlying stock will not be trading at that moment.