Don't expect cash mkts to get extended beyond current trading hours: Limaye

NSE's Managing Director and CEO Vikram Limaye told BS that the exchange will be ready to extend derivatives timings from October 1

Stock exchanges have welcomed market regulator Securities and Exchange Board of India’s (Sebi’s) move to extended derivatives trading hours. NSE’s Managing Director and CEO Vikram Limaye told Shrimi Choudhary and  Sachin Mampatta that the exchange will be ready to extend derivatives timings from October 1 but timings for the cash segment will remain the same. Edited excerpts:

Your first reaction to the Sebi move.

It’s good for the market. We have been saying this was needed from the hedging perspective. It will help take care of event risks as it will provide an opportunity for investors to hedge when other markets are open. So therefore it is good for investors.

Does the settlement process need to be tweaked as banks shut in the evening?

Anyway commodities market is open till that time. We will have to figure out the settlement mechanism, maybe a rolling batch process, where up to a certain point, trades will get cleared and beyond a certain point, they will get cleared the following day. 

Will you use this opportunity to extend timings for the cash segment?

This approval is only for the derivatives segment.

But for the cash segment you have enabling provision for a couple of more hours?

You look at global benchmarks. Nowhere in the world are cash markets open for 20 hours but derivatives markets are open. Everywhere in the world the cash markets are open for limited time frame. So we don’t expect the cash markets to get extended beyond the current trading hours.

Will exchanges face any opposition from brokers, who are concerned about higher costs and manpower?

That may have been the case for the cash market. I don’t think it will be so much of an issue for the derivatives market. Based on the feedback we have got from our trading members, they are quite happy with this announcement.

How NSE will go about implementing extended trading hours?

The announcement is just a few hours old. We will have to get together internally and figure out how this will happen. Suffice to say it is feasible and will be done in a logical way. We will have to take care of the concerns of everyone involved in the process.

How soon will you approach Sebi?

We have time up to October 1 to launch this. So we have enough time to do it. I don’t have an exact day or month for when we will go to Sebi. But it will be well in advance and we will be ready to do this from October 1.