Will Longer F&O Trading Hours Attract New Investors?

The National Stock Exchange Of India (NSE) is planning to extend longer hours for trading in futures and options (F&O). As per the report, NSE is said to have already submitted this proposal to market regulator Sebi and is waiting for approval. NSE's move is expected to be less likely to warm existing investors' hearts, however, the possibility of attracting new investors could not be ruled out.

As per an Economic Times report, that cited three people with knowledge of the matter, NSE is finalising plans to extend trading hours for equity derivatives.

The report highlighted that NSE has proposed 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 is between 9:15 am and 3:30 pm is over. Also, the report mentioned that NSE might even consider extending this session to 11:30 p.m. at a later stage.

Earlier, in 2018, the market watchdog had already extended the trading time in the derivatives market by more than eight hours ending till almost midnight. It allowed exchanges to carry trading in the equity derivatives segment from 9:00 a.m. and 11:55 p.m.

Here's what to expect!

Anand James, Chief Market Strategist at Geojit Financial Services said, "Prima facie an average F&O trader, is less likely to warm up to the idea of the evening session as it eats into one's personal time and space, which is essential for research and planning or more importantly time off the market for recharge and introspection. But the possibility that the evening session could attract a different breed of investors, should not be underestimated."

Also, James added, "While large investors who need depth and tight spreads could wait for the regular session, those looking to react early to global news flow could be interested, despite the risk of potentially lower volumes."

Further, he said, "We have so far taken credit for the strength of our macros, which has helped our indices less troubled by global market volatility. In other words, the prospects of even the index derivatives matching US markets blow for blow look low, and could be limited to some data releases like US non-farm payrolls data or CPI/GDP numbers, while FOMC rate decisions which Indian markets are sensitive to are mostly announced quite late in the session."

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