India is one of the favorite places for foreign investor to place their money. It is not only the money that trades in stock market but it is an indispensible amount which we can’t even think of neglecting. India has got a growing economy and is a safe heaven. The economy has successfully overcome the affects of the economic downturn. Recently Securities and Exchange Board of India (SEBI) has proposed new trading timings for Indian stock markets. In this article we will discuss the relevance of this proposal.
Trading in Indian stock markets starts at 9:55 am and goes on till 3:30 pm, it goes on for around five and half hours. SEBI the regulator of Indian securities market has come up with new timings for stock markets. According to the new time table the markets will start trading from 9 am and will go on till 5 pm. SEBI has said that the new timings will be implemented only after consulting the stock exchanges and stock brokers. SEBI has also placed two conditions before stock exchanges such as;
Stock markets should have efficient risk management system and infrastructure commensurate. Risk management system is an integral part for carrying out efficient clearing and settlement system. It contains some of the risk containment measures like capital adequacy requirements of members, monitoring of member performance and track record, stringent margin requirements, position limits based on capital, online monitoring of member positions and automatic disablement from trading when limits are breached etc. In India NSE was the first one to adapt this system). With the increase in trading hours trading activities will increase and it means the banks and financial institutions have to increase their working hours. The infrastructure that we have now has to be improved.
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|
Country |
Cash |
Futures & Options |
|
New York |
9:30 to 4:00 |
6.00 to 5.00 |
|
Singapore |
9:00 to 5:00 |
9:00 to 5:00 |
|
Tokyo |
9:00 to 2:00 |
9:00 to 7:00 |
|
London |
8:00 to 4:20 |
8:00 to 9:00 |
|
India ( as of now) |
9:55 to 3:30 |
9:55 to 3:30 |
|
India (as proposed by SEBI) |
9:00 to 5:00 |
9:00 to 5:00 |
Some of the reasons as stated by SEBI supporting the increase in trading hours are;
Before any stock exchange decides to adapt the new timings some of the things it has to consider are;
Whatever may be the reason but this directive by SEBI has received a mixed response from the stock market neither everyone is happy nor everyone is sad. The brokers and the retail investors are worried about the price stability and many other factors. However if the brokers it’s up to the stock market to decide the new timings. If everything goes as planned then there will be increase in volumes, more intraday trading, and more inflow of capital from foreign investors, this will help to redirect more flow of money into the financial system.
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