NSE plans to extend F&O trading hours, considers 6-9 pm trade session

During the extended session, market participants can trade futures and options contracts after the 9:15am-3:30pm closes.

The National Stock Exchange (NSE) is on its way to introduce extended trading hours for equity derivatives, according to an Economic Times report.

According to a report, the NSE is considering an evening trading session from 6 pm to 9 pm where market participants can trade futures and options contracts after regular trading hours of 9:15 am to 3:30 pm. The report also suggests that the NSE may extend this session further up to 11:30 pm, as per an anonymous source cited in the report.

With longer trading hours, the NSE is aimed at offering Indian traders the opportunity to display faster reactions to global events. Longer sessions are also anticipated to enhance the exchanges’ trading volumes given the widespread concerns over large traders, including proprietary desks and hedge funds, shifting to rivals, such as GIFT City, where trading takes place round the clock.

In an interview with CNBC-TV18, Sriram Krishnan, Chief Business Development Officer at NSE said, "There is a bit of hesitancy when it comes to extending trading hours of cash equities. But on equity derivatives there was a large consensus."

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The NSE has already submitted its proposal to the market regulator Securities and Exchange Board of India (SEBI), and is awaiting a green light. It would be interesting to note that SEBI has already laid down rules that would enable bourses to keep futures and options (F&O) trading open until 11:55pm, and shares until 5pm.

"The (evening) session would be from 6pm to 9pm to start with and the products that we will offer is only index options and futures and not single stock options and future," Krishnan further added.

The NSE, which had been reportedly mulling over the extension of trading hours since early this year, will likely be making phased introduction of products in the extended trading hour. It intends to begin with index futures and options, including Nifty and Bank Nifty, and later include stock derivatives. The expiry days and timings for all products will, however, remain the same.

Krishnan further said, "Possibly, going forward we can either extend the timeline from 9pm to 11.55pm or we could add more products during the 6-9pm session."

Some of the market participants, including leading brokers, however, do not see any good reason behind NSE's latest decision to roll out evening trading. According to them, longer trading hours might not necessarily help boost trading volume, and would rather flare up costs and trigger employee discontent.