NSE to allow trading in interest rate derivatives till 5 pm from tomorrow

The trading window currently stretches from 9 am to 3:30 pm (Representative image: Reuters)

The trading hours for interest rate derivatives have been extended till 5 pm by the National Stock Exchange (NSE), according to a circular. The change in timing will come into effect from February 23 onwards.

The trading window is now six hours and 30 minutes, stretching from 9 am to 3:30 pm. The decision to extend the time till 5 pm is intended to converge the trading hours with the underlying market timings, the exchange said.

In line with the move, contracts slated for expiry in the current month will be available for trading till 5 pm on the expiry day i.e. February 23, 2023, the circular said.

“There shall be no change in trading hours for other interest rate derivative contracts,” it clarified.

Also Read | Longer trading hours: What the move has in store for traders and brokerages

The NSE also said that all existing expiry contracts with expiry days beyond February 23, 2023, and all new expiration contracts introduced thereafter “will be made available for trading till 5 pm on expiry day”.

The exchange further noted that there “shall be no change in final settlement price computation mechanism”. It will be calculated based on the last 2 hours of VWAP of NDS OM trades subject to a minimum of 5 trades, it said.

Commenting on the development Zerodha CEO Nithin Kamath tweeted that extension of the trading hours could “potentially lead to lower participation and liquidity in the longer run”.

“I’m unsure how it will affect the mental health of active retail F&O traders in the long term. Tracking P&L (profit and loss) for long hours is stressful & can affect life outside trading. While it could boost revenues for the capital markets business in the short term, I’m unsure if retail investors will end up doing better. This could then potentially lead to lower participation and liquidity in the longer run, which will affect everyone,” Kamath stated in a series of tweets.