FMC open to debate on extended trading hours

The Forward Markets Commission (FMC), the commodity markets regulator, says it is willing to discuss the issue of extending trading hours, in line with what the equity markets regulator, the Securities and Exchange Board of India (Sebi), did last week. Sebi has allowed trade timing in equities to be extended, from 9 am to 5 pm; the current hours are 9:55 am to 3:30 pm.

Currently, agri commodities are traded on the exchanges between 10 am and 5 pm. Market participants have urged the regulator on various occasions to extend trading time till at least 7.30 pm, to capture the sentiment of late evening trades. For which, traders now have to wait till the exchange opens the following day.

“So far, no exchange has made any formal proposal to the Commission. If they accumulatively put in a request, we would certainly debate that,” said Anupam Mishra, spokesperson of the FMC.

Earlier, exchanges were keen to have more trading hours in anticipation of higher growth in volume. But, interest waned gradually, as there was no evidence of “missing opportunity” because of the time constraint, said Anil Mishra, chief executive officer of the Ahmedabad-based National Multi-Commodity Exchange (NMCE).

Agricultural commodities’ markets are fragmented. Rajasthan’s climate ensures it tops in guarseed and Maharashtra in sugar, cotton and soybean. The first target of exchanges to set up ticker boards at all 7,500 mandis across the country, which is facing severe challenges.

Most mandis in rural areas do not have an electricity connection. Commodities are kept in the open space. Therefore, sellers require to auction the commodity and buyers to clean, weigh and pack for re-selling. All these have to be done in daylight in most mandis.

Even if trading time is extended, it would not help increase volume, at least in agricultural commodities, as late evening trading in the spot market is not considered a reality, Mishra added.

However, the country’s largest agri commodity exchange, the National Commodity & Derivatives Exchange (NCDEX), is enthusiastic. Said its Chief Business Officer, Vijay Kumar: “More time in globally referentiable commodities, including sugar and soybean, will certainly help exchanges to garner more volume.”

Though, such requests keep cropping up in meetings, no formal request has been made by the NCDEX so far. The Multi Commodity Exchange (MCX), the country’s largest in turnover, however, believes that global development in agri commodities make only a miniscule impact on prices in local exchanges.