SEBI has given the green signal to the bourses to trade for longer hours. Currently the markets open at 9.55 AM and close at 3.30 PM. The exchanges can now remain open from 9 Am to 5 PM. That means an extension of trading hours from 5.35 hours to 8 hours.
This is an exercise in futility. While there will be some positive outcomes of the new regime, over all it will end up in harassing the people concerned, increase operational costs and will un-necessarily raise anxiety levels both for the broking community and the investor fraternity.
Before we put the arguments in favour of the new regulation in the shredder, it will be important to understand why the need arose for such a move.
As interest of the foreign investors have grown in the Indian markets, there is a demand to trade in the Indian Indices when they are officially not open. The Singapore Stock Exchange, allows futures trading in the Nifty. As Singapore is ahead of Indian Standard Time by 2.30 hours, they open earlier than us and therefore trading begins early. Those volumes that happen in the SGX Nifty could have come to Indian markets if they were open. So, for the benefit of a few FII brokerages, the entire nation is being saddled with these new timings.
The poor office boy, who takes the 7.10 Fast local to be in his Fort Office by 8.30 will now have to leave at 6.10. While he goes early, his return will be delayed by 1.30 hours. On an average, the system will take away 2.3 hours out of each individual associated with the markets. That’s treading on private time that people may have got used to.
Post trade transactions and activities will get delayed by 1.30 hours. Right from the printing of contract notes to depository advises and the calculation of NAV of mutual funds will get delayed. .
As offices will work longer hours, the power cost will shoot up. Both the computers and the ACs will report a higher down time. Even the human machines will suffer. Dealers, who have to watch the screen attentively like a hawk throughout the trading time will have to do it for 8 hours now. Eye ache, vision impairment and cases of Cervical spondylosis will go up. As employees spend more time in office, snacking will increase. While it will be a small addition to the administrative costs, it will show up in fatter waist lines. As youngsters will have little time to socialize outside the office, cupid could strike more often at work.
These extended hours will have mixed fall out on the business channels . Suddenly they will have a windfall of these extra two and a half hours of market related programming. Just an extra shift from the regular anchors will do the job, but viewer fatigue could set in. They will need more market guests. As the channels baptize some green horns, the quality of the programming could suffer as a result. The investor is likely to be more confused at the end of the day. Some of the mid-afternoon programmes could lose market share as the viewer reaches for the remote.
What kind of dealing hours do the world’s leading stock exchanges have? The longest working exchange, among the popular ones, is London Stock Exchange. LSE works 8.30 hours from 8 AM to 4.30 PM. The NYSE works 6.30 hours from 9.30 AM to 4.00 PM. Asian bourses have the concept of a lunch break. Hong Kong, Tokyo, Shanghai and the Singapore Stock Exchanges have this concept. But net of the lunch break, Singapore works for 6.30 hours and China for just 4 hours.
So after LSE, the Indian bourses will be most over worked after the new timings kick in. But the main point to be considered here is, that these extended hours don’t really help address the full threat. Even in the revised timings, when the bourses begin the day at 9 am, there will be a window of 6.30 AM to 9.00 AM , during which the SGX will remain relevant for all those traders, who want to position themselves ahead of the Indian market open.
There is absolutely no argument for the extension of time beyond 3.30 pm. The LSE opens at 12.30PM or 1.30 PM if the day light saving is on. Other European bourses also start trading before our markets close at 3.30 PM. If the idea is to prevent business going to the SGX after our markets close, then extension of time to 5 PM is bad idea as negligible volumes happen in that period.
The new timings, therefore, are nothing but an exercise in futility as it does not plug the loop hole it sets to plug but instead creates more problems for the broking and the investor community. |
Trade
