Extended Trading Hours: How NSE's Proposal Could Affect Your Investments

What impact would NSE's proposed extension of trading hours have on investors? Read the article to know more.

Extended Trading Hours

The National Stock Exchange (NSE) has recently proposed extending trading hours for the equity segment to increase market participation and attract more liquidity. This change could significantly impact investors, traders, and other market participants if implemented. Increased trading hours mean increased opportunities for both profits and risks. In this article, we will explore the potential implications of NSE's proposal to extend trading hours for the equity segment. The article has been divided into the following sections for ease of understanding:

  • What new decision has been taken on National Stock Exchange (NSE)?
  • What is SEBI planning to do currently?
  • How can an increase in trading duration help investors/ traders?
  • What are the operating hours of the NSE?
  • What are the trading hours in other major global markets?

What new decision has been taken on National Stock Exchange (NSE)?

Starting on February 23, 2023, the trading hours for interest rate derivatives have been extended to 5 pm by the NSE. Existing and new expiry contracts will be available for trading till 5 pm on the expiry day.

What is SEBI planning to do currently?

According to a report, Ashishkumar Chauhan, the MD and CEO of NSE, stated that while Sebi has extended equity market timing to a maximum of 9 am to 5 pm and derivatives timing to 9 am to 11:55 pm, NSE still needs to follow suit. Chauhan added that they seek feedback from their members and work to determine the appropriate course of action.

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How can an increase in trading duration help investors/ traders?

Extending trading hours will enable traders to deal effectively with overnight market risk. It is expected to attract more market participants, like Mutual Funds and Foreign Institutional Investors (FIIs) and increase volume.

Another reason for considering extending trading duration is the influence of SGX Nifty. SGX offers contracts with different settlement periods: E (same day) and E* (next day). These contracts have different trading times, allowing traders worldwide to trade in SGX even when the Indian market is closed. It results in many foreign investors choosing to invest in Indian future contracts through SGX Nifty instead of domestic markets.

What are the operating hours of the NSE?

Active trading on NSE begins at 9:15 am and ends at 3:30 pm. The NSE wants to increase the closing time by 1 hour 30 minutes till 5 pm.

The market timings of the currency derivative segment and commodity markets on NSE are from 9 am to 5 pm and 9 am to 11.55 pm, respectively.

What are the trading hours in other major global markets?

Below are the trading durations of the three most important global markets from an Indian perspective.

  • United States: The New York Stock Exchange has normal trading hours from 9:30 am to 4:00 pm Eastern Standard Time (EST). Additionally, the NYSE offers extended trading hours through pre-trading sessions (4:00 am to 9:30 am) and post-trading sessions (4:00 pm to 8:00 pm EST).
  • Singapore: Trading on the Singapore Stock Exchange typically occurs between 9:00 am and 12:00 pm and from 1:00 pm to 5:00 pm Singapore Standard Time. SGX provides a T session from 9:00 am to 6:10 pm and a T+1 session from 7:05 pm to 5:15 am local time for Nifty index futures & options and NSE IFSC Nifty futures & options, respectively.
  • United Kingdom: The London Stock Exchange operates between 8:00 am and 4:30 pm GMT. In addition, pre-trading hours are from 5:05 am to 7:50 am, while post-trading hours are from 4:40 pm to 5:15 pm GMT.

Market experts believe that extending market hours until 11:55 pm would benefit positional traders, allowing them to better adjust to news flows in US markets. However, increasing trading hours by a few hours would provide little or no benefit to investors.

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SEBI is considering extending the trading hours for equity markets from 9 am to 5 pm, while for derivatives, it is from 9 am to 11:55 pm. Extending trading hours is expected to reduce the risk associated with overnight markets, attract more market participants and increase volume.

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