Sebi may extend trading hours for derivatives market

In a bid to bring back some of the lost zing, the markets regulator, the Securities and Exchange Board of India (Sebi), is looking to extend the trading hours for the derivatives market. Sources said Sebi was considering if trading in index futures could be kept open even after the cash market closed. The move will provide investors the tool to price in news flow that comes after market hours.

Currently, a lot of foreign investors use global platforms such as the Singapore Stock Exchange (SGX) and the Chicago Mercantile Exchange (CME) — which offer almost round-the-clock trading on some Indian contracts — for trading or hedging their underlying exposure to Indian stocks.

“Extending derivatives market timing would be a great idea. Our market should be open whenever customers want it to remain open. Given the current setting, there is a crisis on the international competitiveness of the Indian exchanges.

A decade ago, nearly 100 per cent of the trading on Indian underlying used to take place domestically. Half of that has now gone to overseas locations. Our index, currency and interest rate derivatives are all getting traded overseas, which is a big problem. Extending timing is one element which can help us tackle this issue,” said Ajay Shah, senior fellow at the National Institute of Public Finance and Policy (NIPFP).