Commodity exchanges extend trading hours: Here's what experts feel about it

The daily trade now commences an hour early at 9 am and goes on till 5 pm. Globally, referential commodities continue to have their trading hours between 9 am and 11:55 pm

The country's commodity bourses — Multi Commodity Exchange (MCX), National Commodity & Derivatives Exchange (NCDEX) and Indian Commodity Exchange (ICEX) extended the time for trading in agricultural commodity derivatives by an hour from Monday, December 31, 2018, despite agitations by a section of traders.

The daily trade now commences an hour early at 9 am and goes on till 5 pm. Globally, referential commodities — both non-agri and agri ones — continue to have their trading hours between 9 am and 11.30 pm / 11.55 pm and 9 pm respectively.

On December 19, 2018, MCX and NCDEX had in separate circulars announced an increase in trading time by two hours. From the earlier timing of 10 am, both exchanges announced a new commencing time of 9 am, according to a November 30 circular of the Securities and Exchange Board of India (Sebi). Also, these exchanges had extended closing time by an hour to 6 pm across all agricultural commodities effective from December 31, 2018.

Following the notification by the exchanges, over two dozen agricultural mandis had transacted no business on December 21, 2018. CLICK HERE TO READ THE REPORT

After a backlash from spot traders, all the three commodity exchanges had sent out revised circulars on December 28, 2018, informing that the trading hours would get extended only by an hour and trading would commence from 9 am, keeping the closing time unchanged at 5 pm.

While some traders and small brokers fear that the extension of trading hours in commodity bourses is likely to raise their operating costs and leave them with lower gains, others feel that it is too early to comment on the recent change as markets the world over are in a holiday period.

Babulal Gupta, chairman of Jaipur-based Rajasthan Khadya Padarth Vyapar Sangh, an agricultural commodities’ trade body, feels that Sebi is experimenting too much with the commodity trading space and these experiments will not benefit local farmers or traders. "It will only benefit big corporate entities and multinational trading firms which will then dictate the local prices of grains and other agriculture products," he said.

According to Ajay Kumar Kedia, managing director at Kedia Stock & Commodities Research, traders and brokers will have to begin their work an hour earlier and this will increase their operating cost and manpower.

Small brokerages were likely to be affected more as their costs would rise even as there might be a drop in traders' participation, he said.

However, Navneet Damani,  VP - Commodity Research, Motilal Oswal Financial Services, feels that it is too early to analyse the volumes in domestic bourses as the markets are still celebrating new-year holidays. He anticipates that the extension of trading hours might fetch more business in commodity trading and there might be a rise of around 5 per cent in the coming days.

Some traders are of the view that the extension will give them more time to hedge their positions and it should not affect their day-to-day work.

"In our Nizamabad market, there are many traders who deal in turmeric and maize futures on NCDEX. For us, there won't be much of a difference if exchanges extend their time by one or two hours," said Amrutlal Kataria, propreitor of Bhanu Traders in Nizamabad.

In terms of data, the average volumes on NCDEX has risen 7 per cent in the past three sessions when compared with the December average (till December 28, 2018). However, the average on MCX has slipped by over 1 per cent, and on ICEX by 15.5 per cent.