Market regulator, the Securities and Exchange Board of India (SEBI), has allowed stock exchanges in India to increase their trading hours, stretching over both mornings and evenings.
SEBI agreed to this long-standing demand by market participants that they needed the extra hours of trading to better align their trades to the happenings in the international markets.
The current market hours for Indian stock markets are from 9.55 a.m. to 3.30 p.m.
The new trading hours will stretch from 9 a.m. to 5 p.m., mirroring the general office hours maintained by government and private corporates in the country. More importantly, it will lessen the time gap between the Indian and US stock markets, while also giving traders positive reaction time to markets that start early in the Asia-Pacific region like Japan, Australia and later China, Singapore and South Korea. In the evening, Indian traders will be better able to position themselves as trading starts in the West European zone, covering important exchanges in the UK, Germany, and France.
The final argument in favour of extending trading hours was that it would lure international trading.
The trading hours will be limited to the cash and derivatives segments.
SEBI has asked exchanges to place a risk management system and the infrastructure that would be equal to handling the resultant increase in trades.
SEBI had, in March 2009, proposed to extend the trading hours to align the domestic bourses with international markets and asked various stakeholders (both stock exchanges and other market participants) for their opinion.
The statement by SEBI released at that time said: “With the increased integration of the international markets, information originating elsewhere has a bearing on Indian securities market”.
The other benefits that may flow from the move include Indian markets assimilating data quickly and thereby becoming increasingly efficient and form a part of the global machinery, and allow traders to take longer positions.