India market regulator examining proposal for extended derivative trading hours – sources

By Jayshree P Upadhyay

(Reuters) -India’s market regulator is examining a proposal from the country’s top exchange to extend trading hours for index derivatives, two sources with direct knowledge of the matter said on Wednesday, which could help investors better manage their risk.

The National Stock Exchange (NSE) has proposed evening sessions between 6 p.m. IST and 9 p.m. IST, in addition to the regular trading hours of 9:15 a.m. to 3:30 p.m., to trade in index futures and options, an NSE official told Reuters.

The Securities and Exchange Board of India (SEBI) has not yet taken a final decision, the two sources said, declining to be named as they are not authorised to speak to the media.

The regulator is assessing whether the move will fuel already high derivative trading volumes or lead to hiccups in trade settlements, one of the sources said.

“For smooth settlements, both the NSE and BSE and their respective clearing corporations need their systems to be prepared to handle extended trading hours,” the person said.

The BSE is prepared to facilitate evening trades, an official familiar with the exchange’s thinking said.

The BSE and SEBI did not immediately reply to a Reuters email seeking comment.

The NSE has proposed that evening-session trades be settled with the trades of next day, or two days later, said Sriram Krishnan, NSE’s chief business development officer.

He said that cash equities and single stock options have been kept out of the pilot plan.

Nonetheless, the extended hours will benefit domestic investors, said Kamlesh Shah, president of the Association of National Exchange Members of India.

“Across the world derivatives markets are trading for much longer hours, which leads to foreign countries scoring over India.”

“Even foreign investors trading in Indian securities have the option of hedging their risks at Gift Nifty, which is operating even past midnight,” he said.

The Gift Nifty – part of a tax-neutral international financial centre in western India – has two trading sessions — from 6:30 a.m. IST to 3:40 p.m. and from 4:35 p.m. to 2:45 a.m. IST.

(Reporting by Jayshree P Upadhyay; Editing by Savio D’Souza)