MSEI awaiting SEBI’s approval for extending trading hours

Yet again a proposal has been put forth to extend the trading hours on Indian stock exchanges. In 2009 the capital market regulator had allowed the benchmark indices to extend the time to 5.00 p.m., but both NSE and BSE remained hesitant about it.

This time it’s the Metropolitan Stock Exchange of India (MSEI) which has proposed to increase the trading hours for Indian equity markets by extending the closing time from 3.30 p.m. to 5.00 p.m. The proposal is just waiting for SEBI’s approval.

MCX-SX, MSEI would enforce it upon the exchanges to implement the time extension on getting the approval. This would lead to a tug of war between the brokers and the investors.

The biggest motive is to encourage investors to trade more and simultaneously raise higher brokerage for the firms. Moreover, there are major brokers who are also a part of currency derivative markets which closes at 5.00 p.m. and commodities market that closes at 11.30 p.m. So these players would not have to bear high costs for any set-up.

The move is said to facilitate members to reach out to investors in semi-urban and rural areas to widen the shareholder base and bring in more liquidity in the markets.

However, the other global markets, specifically the U.S markets that open at 7.00 p.m. IST and the European markets that are already operating since 12.30 p.m. IST would leave behind a bigger impact on the Indian markets with such extended timings. The consequence will be the increased volatility in intraday trading.

Logically interest of the investors (majorly the HNIs) who are involved in both Equities and Commodities would likely get diverted from commodities to equities for larger period of time.