Mumbai: Market regulator Sebi's grand plans of extended trading hours for equities and unified exchanges offering both stocks and commodities will remain in paper for some more time as none of the exchanges have come up with concrete plans for both, the regulator said Tuesday. Had the leading exchanges BSE and NSE followed their plans and initial enthusiasm, domestic stock investors would have been able to trade till 1700 hrs instead of the present 0915 to 1530 hrs window and would also have been able to trade in commodities as well on these exchanges from 1 October.
Both the provisions were to be effective 1 October, which would have made the domestic markets better align with the rest of the world exchanges and would given domestic equity market investors equal opportunities their commodities peers enjoy now.
It can be noted that on 4 May 2018, Sebi had allowed both BSE and the NSE to extend their equity trading timings to 1700 hrs from the present 1530 hrs from 1 October this year. It already allows extended hours in the stock futures and options segment up to 2355 hrs in line with the market timings in the commodities derivatives segment.
Similarly, on 28 December 2017, to bring about a simpler securities market trading infrastructure, Sebi had announced much-awaited integration of stocks and commodities trading on a single exchange platform from 1 October 2018.
"None of the exchanges have come up with a concrete plan in regard to extending their trading hours nor they have come up with a plan for unified exchanges proposal as well. Both the exchanges had sought permission from us which was given as well," Sebi chairman Ajay Tyagi told reporters after the board meeting.
"Before we allow them to extend the trading hours, we need to see their execution plans in the sense of risk mechanism, staffing, and the inputs from other stakeholders," Tyagi pointed out.
Sebi had on 4 May this year said to have extended trading hours, the bourses would have to submit a detailed plan with a framework for risk management, settlement process, monitoring of positions, availability of manpower, system capability and surveillance systems.
When asked does this mean that the regulator will extend the deadline for implementation, Tyagi quipped, "where is the need for extension? October 1 is not a deadline or a target, but an enabling provision for exchanges to implement our proposals."
A two-phase integration of trading in commodity derivatives market with other segments of securities market at the exchange level was approved by the Sebi board on 28 December last year. The move would have helped BSE and NSE launch their commodity trading platforms. Currently, commodity derivatives are traded on separate exchanges, which include MCX and NCDEX.
Sebi has already been regulating the commodities derivative market after the merger of erstwhile FMC (Forward Markets Commission) with it in mid 2014 after the NSEL scam. For smoother implementation, Sebi decided to have integration in two phases. The first phase involves integration at the intermediary level, while the second phase deals with enabling a single exchange to operate various segments such as equity, equity derivatives, commodity derivatives, currency derivatives, interest rate futures and debt instruments, among others.
Sebi said all necessary steps required for the first phase has been already taken by it. To implement the second phase of permitting trading in commodity derivatives and other segments of the securities market on a single exchange, Sebi approved suitable amendments to existing regulations and these amendments would be effective 1 October 2018.
"All exchanges will be able to do securities trades as well as commodities trade from 1 October 2018. As you are aware when FMC was merged with Sebi in September 2015 there were different timelines for different items. Going by these timelines we could see that October 2018 perhaps is the right time where it would be three years after Sebi-FMC merger that all exchanges are able to deal with commodities or securities. This has been approved by the board," Sebi had said.
Products will have to be introduced with approval of Sebi and detailed guidelines will come out in consultation with all stakeholders, he added.
On 4 May the Sebi had allowed exchanges to extend trading time for equity derivatives till 11.55 pm from 1 October. The move is part of its efforts to enable integration of stocks and commodities trading on a single exchange.
Reacting to the Sebi move both BSE and NSE had said they would be ready with a plan as they felt that extended trading hours would bring domestic markets in line with international markets and also on par with the domestic commodity derivative markets.
Updated Date: Sep 19, 2018 09:09 AM