National Stock Exchange of India: Extended Equity Derivatives Trading Hours and Boost in Gold Retail
NSE Finalizes Extended Equity Derivatives Trading Hours
The National Stock Exchange (NSE), the largest stock exchange in India, is reportedly finalizing plans to extend trading hours for equity derivatives. This significant move aims to offer increased flexibility for traders, allowing for extended market participation and potentially increased liquidity. As the largest bourse in India, the NSE facilitates the majority of the country’s securities transactions, making this development noteworthy.
The proposal includes an evening session, possibly between 6 pm and 9 pm, when market participants can continue trading futures and options contracts after the regular session, which runs from 9:15 am to 3:30 pm. The NSE might consider extending this session to 11:30 pm at a later stage. The aim of introducing longer trading hours is to provide local traders with the opportunity to react to global events sooner. Currently, Indian exchanges close before US markets open.
Extended trade timings could also boost exchange trading volumes as there are concerns over some large sophisticated traders, such as proprietary desks and hedge funds, moving to rivals including GIFT City, where trading is open round the clock. The NSE has submitted its plan to the Securities and Exchange Board of India for approval. The regulator has already drawn up rules that allow bourses to keep futures and options (F&O) trading open until 11:55 pm and shares until 5 pm.
Resistance from Market Participants
While the NSE is eager to introduce evening trading, the proposal faces resistance from some market participants, including some leading brokers. They argue that longer trading hours may not help in boosting volumes or turnover but would only end up driving up overall costs and employee discontent. However, the resistance is not as strong as it used to be, as the market is dominated by online brokers with automated systems. These firms do not need to hire a large number of additional relationship managers to service clients in the event of longer trading hours.
Surge in Gold Retail Despite High Prices
In another development, top retail chains in India are witnessing a surge in jewellery purchases via deferred or monthly payment schemes, despite the potential deterrent of record-high gold prices. Prominent jewellery retailers have reportedly seen more than a 50% increase in purchases through these payment schemes. This trend suggests that while the cost of gold may deter some, the allure of precious metals and the convenience of flexible payment options are driving sales for these retailers.
US Funds Appeal for Review Advancement
Prominent US funds have appealed to the managers of the Bloomberg Barclays Emerging Markets bond index to expedite a scheduled review to early October. This appeal is made with the intention of advancing the decision on India, currently featuring on the competing JP Morgan gauge. If the review is brought forward by a quarter, it could provide significant investors tracking the benchmark with an option to gradually purchase about $25 billion of bonds issued by India, considered one of the least indebted major economies. This move could potentially spur significant investment in the Indian economy, reinforcing its position as a viable and attractive investment destination in the emerging markets segment.
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