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BSE vs NSE: Who wins with extended market hours?

December 17, 2009

INDIA-BUDGETMarket participants will soon have to reschedule their morning routine as Indian bourses — the BSE and NSE — are set to extend their daily trading time by 55 minutes from January 4, 2010.

The markets will now open at 9 am and close at their normal closing time of 3:30 pm, but the question is — who would actually benefit with this move? Is it becoming more a battle between the two exchanges to win market share?

It all started after the Securities and Exchange Board of India allowed exchanges to operate between 9 am and 5 pm. On Tuesday, the BSE was the first to move as it said it would advance its market opening time by 10 minutes from Dec. 18, saying it aimed to increase investor focus in the derivatives segment.

The NSE on Thursday announced it was advancing opening time by 55 minutes to 9 am from Friday. The BSE followed suit.

But now the bourses have decided to start with the new timings from January 4 after criticism from the broker community.

These changes have got mixed reactions from the investor community and brokers.

In fact, the brokers were never in favour of such a change. A poll conducted by the Association of National Exchange Members of India had earlier revealed that 62 percent of the polled brokers were not in favour of extending trading hours. A similar survey by the Bombay Stock Exchange Brokers Forum said that 79 per cent of the members were against the extension.

Before the bourses decided to postpone the date to January 4, Samir Arora of Helios capital told a TV channel that it was an “arrogant move on part of BSE, NSE”. An expert also called the exchanges “insensitive”.

The NSE, which has about 1,400 listed companies boasts a daily turnover that is three times that of BSE, which has over 5,000 listed companies.

Many questions remain unanswered — How would banks open this early? Can brokerage houses put a system in place to cater to the needs of their clients? How would margin funds be made available to clients early in the morning?

Concerns remain over whether a proper system is in place to handle the change in hours, market players now have a little over two weeks to gear up for new timings.

What do you make of this move and who do you think stands to gain the most?

Comments

Its a move that would benefit investors and the stock exchanges and has perhaps been long overdue. It will never harm to have one of Asia’s big stock markets trading for more time.
What is however questionable is the sudden rush to increase trade timings without appropriate preparations. What perhaps needs to be ensured is that such announcements are made in the future after appropriate clearance from the regulators in consultation with all stakeholders. And consultation should not be purely academic as it seems to have been.

Posted by Arun G | Report as abusive
 

What is the need for this? We are happy currently.. and if we want this.. it needs to be a very slow process..

Posted by Ramu | Report as abusive
 

Its the brokerage houses’ who is going to gain the most as increased trading hours means more transaction, resulting into more brokerage generations.
And as far as technology adaptability is concerned that will be a concern initially but it will be on track once things starts.

Posted by Saurav J. | Report as abusive
 

I agree with the concerns raised related to infrastucture to support extended trading hours.
Apart from this, will there be any impact on market volatility? I think this might lead to lower volumes, therefore higher spreads and higher volatility during the extended hours.
Human impact- In metros where its normal to commute for an hour to reach yuor office- wont the extended hours unnessarily increase the stress levels- just a thought!

Posted by Gaurav K | Report as abusive
 

@ Gaurav
I agree with your stress level part .. I today saw an expert saying on TV that the BSE/NSE have given such a short notice, what do they want.. that a person should leave his morning gym and sit in front of the screen? :)

Well, everything has a positive and a negative. There are stock markets globally that are open for 24 hours. We have just extended by 1 hour. Yes no doubt, any person associated with markets — trader, broker, investor, media etc etc will need a change in routine.. and that is what is not being liked.

I think, it is possible to extend hours, but perhaps, Friday was too early.. One needs time .. banks need time .. the exchanges and investor/broker community needs solid preparation to get started with this..

Many predict that the market would soon be a 9-5 thing. Now let us wait for Jan 4 to see how it does and how people react!

Posted by Aditya | Report as abusive
 

The market timings should be extended from 9.00 am to 5.00 pm from 4th January 2010.The exchanges abroad are working for eight hours a day. Then why we should not? The extended timings shall help increase the trading volume as well as extend opportunity to the investor community to participate more.Thus extended timings will prove a win-win situations for all – investors,brokers and stock exchanges. Banking systems shall synchronise their working to cater the need with help of Reserve Bank of India.

 

@ Gumaste
I agree, we slowly need to align with global markets. And operate as they do, to compete with the world, but, do we need to do that in 2 days?

Also, why do you think that 69% of polled NSE brokers and 79% of BSE brokers are against the move? Don’t they want to earn more money?

Posted by Aditya | Report as abusive
 

I just laughed when I heard the discussion of protest against extension of trading hours. Only in India, we have the liberty of lot of holidays for stock market. Previously, stock exchanges are controlled by Gujarathi people. Now it is controlled by FI and FII and select some groups. I support extension of trading hours due to following apart from suggesting some more measures.
1. The clients of stock exchange can do online trading before starting for their office/work place. It will be convenient.
2.When employees of software companies whether in Mumbai or Chennai work from 9 am to 7 pm, there is no harm in having the timing like 8.30 to 6.30 pm for broker houses.
If needed, a lunch break can be given between 1.00 pm to 2 pm and extending the trading hours upto 4.30 pm.

3. Number of holidays should be as per global norms for stock exchanges.

4. Private banks immediately will arrange for necesary fund support from 9 am as they need business. But there will be some difficulties in Govt banks.

5.Definitely more business will be there as people will be tempted to use this extended hours especially in non-metro places and with various instruments like shares, currency, gold, commodities, a good market is awaiting the brokers. But they should come forward to use this opportunity. Even on saturday, they can work just like commodities.

I salute the management of NSE and BSE including SEBI for suggesting the extended business houses for bourses.

venkat
4.

Posted by venkat | Report as abusive
 

This is gonna do no good to either market or to market participants. We were still one of the largest equity market in the world. Please be self sustained. People who look at Stock market for business alone is going to be benefited. Real savvy investors aren’t going to be benefited anyways.

Posted by Deepan | Report as abusive
 

The move by the NSE and the BSE is good and very encouraging because it is a small small step forward to prevent manipulation and eliminate the advantage of news flow the few influential entities.
Take the FOREX markets which are open 24 hours from monday to friday.The lack of a break prevents choppy opening.We have to contend with gap up and gap down openings.
Just remember the day when the election results were declared and the National Congress was coming out with a clean sweep.The Market jumped twice and no retail investor could enter due to the circuit filter that closed the market.Who did it all…… no need to guess: only an entity with real financial clout clout could have done this
The FOREX markets do not gap up or gap down.Thus it is a view shared by many that the FOREX markets are trending markets.
If any entity tries to manipulate the continuous market open 24 hours, if not 24×7, he shall soon regret it’s folly.
Secondly, the NSE and the BSE should really examine the implementation of GTC orders ( good till canceled orders), which would go a long long way to enhance price discovery.This is being done in the Capital Markets of many developed countries and in the FOREX markets as well.
If one holds a view that a particular stock has a fair value or a technically correct position at say price ‘X’ then he can place a GTC order at that price. Let the manipulators do what they want to do because the price should come back to this level.At least one will get a chance to buy a stock at a price at which he feels comfortable.
I expect that positions will be built up at the fair price over a period of time and thus price volatility shall be reduced.
that’s all for now.
THANKS.

Posted by RAJINDER SHARMA | Report as abusive
 

It all started with SEBI taking such miserable decision. If market is going to start @ 9am, just imagine how much time will people have to read the newspaper to get themselves prepared for the market?moreover today indian exchanges are operating without lunch break, whereas other countries operate with break. So it is getting adjusted. So why we alone should extend further. Also just because US operates futures on 24 hour basis it doesnt mean we should also do it..then if US which had liberal bank policy underwent subprime crisis..do you mean to say we should also follow such bad policies just that it is followed elsewhere..let india be ruled by indians and not FII’s’

Posted by raj | Report as abusive
 

I think the SEBI chairman had taken an arrogant move by doing this..SEBI has more duties to perform..SEBI chairman has just noded to the FII’s desire to extend the timings.SEBI is really working for investor interest should concentrate on how the IPO companies are coming with sky high issue price and operating on fly by night like pyramid saimira or austral coke..point out any IPO company in the recennt past which is doing well on listing..SEBI can work on this than working on extended market timings..let indian exchanges not be dictated by an one man show.

Posted by kumar | Report as abusive
 

Hi i am aruna working as an stock market analyst..by working from 9 am, and concentrating on the trader screen continuously the stress level is only going to increase..i think this proposal be dropped out completely..for ages we have operated on 9.55 to 3.30..why is this arrogant change which is going to be a hardship to the entire investor community

Posted by aruna | Report as abusive
 

The argument of long hour’s before the terminal is really not an issue.
Once one has analyzed the trend and has placed his GTC order he can move away from the terminal and just leave the terminal “on” while he even goes for his workout.The market participant , however, must have a clear idea about the likelihood of his position being activated in the near future.He should be trading on the 60 minute timeframe for this.
If the market participant is trading on the 5 min or the 15 minute time-frame then he has to sit before the trading terminal as he has chosen to track the smaller movements in ‘ price’.This market participant does not have the analysis of the bigger trend and chooses to exploit the smaller fluctuations in price.
This does not harmonize with the concept of ” price discovery”.
Hence, tracking the market on the daily basis or at least the hourly basis is at the root of price discovery.
THANKS.

Posted by RAJINDER SHARMA | Report as abusive
 

Hi Aruna
Perhaps you may like to respond to my observation above.I have read all your comments and value your inputs as a stock market analyst.
I trade on the longer time-frames and do my own technical analysis in which i have confidence.I really do not get confidence otherwise to take any position.
I feel that ” price discovery” does not occur on the 5, 15, or even the 30 minutes time frame’s.Further stable technical analysis does not really have stability on these time frame’s.

Posted by RAJINDER SHARMA | Report as abusive
 

today marketing nice

 

I think the move will help the NSE more than the BSE, simply because the former have more exposure and trading opportunities available in derivatives than the latter. NSE, is no doubt more efficient of the two and possess greater technological supremacy. So this move will help NSE garner more market share at a faster rate. BSE, on its part needs to pull up its socks and increase its derivatives presence in a big way.

Posted by Ved Prakash Pati | Report as abusive
 

Wake up early guys.. it is good for health & wealth :-) .. No exchange opens so late at 9:55AM so lets get on with this rathan moaning about it.

Posted by Suresh | Report as abusive
 

WHAT IS TIME TIME OF STOCK EXCHANGE IS IT IS OPEN ON SATURDAY

Posted by SANJAY | Report as abusive
 

PUSH!! may be the keyword in this reset economy ,but merely pushing the trade timing(I mean extending) without enough time to prepare may put investors in a uncomfortable zone.
BUT,considering the 2 big bourses they need to implement it asap as these will increase the business volume of 2 big Bourses and lets see how the trading agencies are adapting to the extended timing. And personally I think this needs to be done asap with appropriate consent from all stakeholders.After all ,this is one of the steps leading to a developed INDIA

-Jai Hind

Posted by Vijaya Prabhu | Report as abusive
 

we happy with 9.55 am to 3.30 if necessary give the tea break time of 15 to 20 mins in between 1 pm to 2 pm and extended the time till 4 pm

Posted by babu | Report as abusive
 

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