SEBI approves extension of trading hours on stock exchanges

Trading Announcements
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Can we keep ourselves awake till 11:30 ?
Why currency futures have been excluded ?

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Form when this going to be implemented?

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as looking volatility will decrease and intraday strategies will need to be change

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@nithin is it for stocks derivatives or includes index derivatives?

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I think options trading will vary.

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And I forgot to add another important thing, commodities trading will start on equity exchanges from October. I guess this increase in time is also to accommodate equity exchanges to stay open when it starts.

So commodities for sure, maybe cross currency pairs, and index derivatives might be open till 11.55 pm. I don’t think stock derivatives will be allowed.

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exchanges will go for is, as longer trading hours means more number of transactions which will bring more income to them. STT and exchange txn charges :slight_smile:

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Maybe the extended hours will only be for Index futures initially. Which is a rather good thing. As Global indexes also trades for extended hours. For eg S&P Emini has Globex hours which trades overnight.

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Another RIGHT move from Sebi after the regulation of derivative margin requirement. Extended derivative trading session will act as Pre-market session for the next day Capital market opening. So, exchanges need not have a separate pre-market session everyday in the CapitalMarket for price discovery.
Also,I believe there will be extension of CapitalMarket session till 5PM and Cross-Currency derivative session till 11.55PM in the future.

Here is my wishlist for exchange working timings:
9AM - Currency derivatives, Equity derivatives & Commodity derivatives Opens.

10AM - CapitalMarket Opens without any Pre-market session.
2PM till 3PM - CapitalMarket closure as Lunch-Break after European market opening.
3PM - CapitalMarket session resumes.
5PM - CapitalMarket closure along with INR derivatives closure.

11.55PM - Cross-Currency derivatives, Equity derivatives & Commodity derivatives closure.

Bottom line: The derivative speculation noise gets separated from the CapitalMarket with equity derivative losing focus and the CapitalMarket can gain Focused attention. :+1:

p.s:Looking forward for regulation from Sebi on margin requirements of Intraday derivative trading products. The money lost from the intraday derivative products is way more than the money lost from acting on spam Equity SMS tips.

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@nithin

Will the margins come down after the trading hours extension rule from oct 1?

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one straight forward change will happen that is i have to change my intra day strategy…:triumph::face_with_head_bandage:

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10:30 pm, 15th October 2018, nifty today made high with 15 points going north and low for 10 points… Trading weather forecast 15 points average volatility from 6 pm to 11 pm :wink:

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That is not a good move @ all. This will probably reduce the market volatility and as per working people (job) they usually choose mf route to invest so they probably do not care.
This will also increase pressure on trader (mostly intraday) as working from 9 to 3:30 was great like school hours and we have lots of time for other activities and plan for next trading session (while markets are closed (in peace)).
I like to trade like 2-4hrs and call it a day after good profits or loss knowing market will close 3:30 and also knowing the volatility behavior (like hight @ opening and near closing and low at mid ) helps a lot but with this long trading hours it will be difficult.

Or may be i am wrong and this is going to be a good move (:stuck_out_tongue:)

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Right. Volumes will be high in first and last hour in any case. Not good for daytraders as long hours will stress them out. Good news for swing traders as this will reduce gap up/ down.

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imagine those poor souls trading on 5min charts…

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Lol… Don’t even mention the ones trading on 1Min… Lol… Or lower maybe tick charts like 500 tick…:joy::joy::joy::joy::joy:

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Day traders will have to shift to half-day traders lol

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India’s market regulator, SEBI in a landmark decision on May 4 announced that stock exchanges will now be able to trade in the Equity Derivatives Segment between 9 am and 11.55 pm. The motive behind the change is to bring the timings in-line with the commodity market.

But this clearly mentions equity derivatives not index

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So I wrote this on the Sensibull Blog on Medium about what will change because of this move. Copy pasting for convenience. You can read on Sensibull on Medium here as well.
Here goes:

“That was a total dick move” — Someone at SGX

First things first. None of this might go through because SEBI has allowed this does not mean NSE or BSE will implement it. Having said that, there is a very high chance of this going through given the recent SGX developments.

Before we get into the option math of what would happen, let us look at simple things on a lighter note.

Option traders- Poor guys had a life after 3:30, now they do not. Which also means Bombay is the only city to trade now, given the party starts after midnight there. The only place which remains open after 11:55 in Bangalore is the chaiwala on the cycle on Madiwala Junction.

Interesting life for Retail F&O junta — These guys worked day jobs, and occasionally sneaked out and traded during office hours. But now they will go home and trade. I am worried for their wives and girlfriends.

Less gambling now — If you take a position when a US event such as FOMC, or NFP, or US GDP is going to come in the evening, you are gambling. Now we will see less of that. In short, around 11:55 is a good time to place your bets. And it’s more predictable, and less of a gamble.

Hours of volume might shift - In long hour markets such as FX, most of the volume happens during London Open, US Open, and London close. We could potentially see such a shift. If you do not like the mornings, hurrah!

NRI Community can now trade F&O. The more participants the merrier, right?

All those TV channels which give gyaan about markets — they will double their ad revenues now.

Okay, so what will happen to the market?

  1. The number of violent gap up and gap down openings will come down.
  2. Implied volatilities on stocks and indices will go down.

The number of gap up and gap down openings will go down simply because the nasty overnight surprises coming from overseas, especially the US, are not overnight surprises anymore.

  • Most data releases in the US happens around 6:30 India Time. Now they will happen during India hours. Even the late ones such as FOMC which happen at 11:30 IST will give 15 minutes for India to react. The only exception is Daylight Saving Time adjustment (DST) from November to March. DST sets clocks in the US back by 1 hour. So we will miss a few events which happen at 12:30 in the night IST during DST adjustment months. Let’s ignore that.
  • A lot of US markets action will now happen during India hours, which means we will react while the US is reacting, which leads to a continuous adjustment rather than gap jumps.
  • We will now trade during London and EU closing hours, which takes care of most of the European markets and certain other asset classes such as FX and commodities.

Okay, so how does implied volatility on every single stock and index out there come down?

Implied volatility is a measure of uncertainty in the market. It says how unpredictable the option sellers think the markets are. The biggest uncertainty an option seller faces is the overnight gap risk. The daytime volatility is something which traders can easily manage. If there are no gaps, it is much easier for traders to sell options and manage their risks. So a large part of Implied Volatility is about the gaps will on opening. With less and smaller gaps there is lower uncertainty.

Thus, the implied volatility will fall.

What about the effect on market participants?
Good for institutions who sell options with continuous delta hedging. Now they have a better shot at continuity of hedging. Continuous delta hedging needs VERY large positions. So we are talking of the large institutions.

Bad for option sellers who sell without continuous delta hedging, because the IV, and hence the absolute premium on options is now lower. Smaller players, and any retailers will be worse-off

Silver lining for retailers- Option buying will be a better game if IVs will fall. I think it will still be a bad game. It will become a less loss-making game from a massive loss-making game.

In the next post on the blog we will see why IV will drop if there are no gap openings. Here is where the fun starts. That should be out in 2 days. Read that only if you like that kind of stuff please.

Here is the link to Part 2

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@Abid_Hassan extended hours is appicable to only index trading or it includes equities trading also pl clarify