Extension of F&O trading hours: Experts, traders express distinct views (2024)

On Monday, it was reported that the NSE is finalising its plans to extend the equity derivatives trading hours in a phased manner. An evening session for equity derivatives trading between 6 pm and 9 pm is likely to be proposed by the stock exchange, an Economic Times report said, quoting multiple sources.

The market participants can continue trading futures and options (F&O) contracts in the evening session after the regular session which begins at 9:15 am and ends at 3:30 pm.

At a later stage, the NSE might also consider extending the evening session till 11:30 pm, the report added.

“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," said Anand James, Chief Market Strategist at Geojit Financial Services.

Also, 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, he added.

Read here: NSE plans to extend trading hours for derivatives segment in a phased manner: Report

Meanwhile, the bourse is reportedly considering to introduce products in the evening session in a phased manner and plans begin with index futures and options including Nifty 50 and Bank Nifty.

Raising concerns about traders’ health, Naresh Nambisan, a full time trader, expressed his views on social media platform, X.

“Trading is a high stress job. Here your longevity matters. So more than 6 hrs will affect your health. Breaks & rejuvenation is important in this game. This proposal will also increase volumes for NSE as all those who who are in day jobs will try to trade & lose money thinking of making casual money during evening session," Nambisan wrote.

NSE’s plan of extending trading hours is aimed to offer an opportunity to domestic traders to react to global events, according to reports.

Reacting to this, Samir Arora, fund manager and founder of Helios Capital, wrote, “How does it matter if traders react immediately or next morning. For the same pot of money everyone works more. Instead increase the number of stocks that have listed futures to bring more efficiency to stock prices."

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Explaining further how a futures contract increases efficiency, Arora replied, “Because people can short and whenever there are two sides in a market, market will be more efficient. Does not happen in 100 pct of the cases because a large whale might rig both cash and Futures but their effort goes up and therefore there will be less cases of price rigging or artificially held up or held down prices."

Market expert and Co-founder of StockEdge, Vivek Bajaj believes the biggest beneficiaries of the proposed extended time will be exchanges, brokers, government, media, and doctors, while the biggest loser will be retail traders, particularly intraday.

“Rethink and restrategize. Momentum Stock Trading will be the best. Move out of indices ASAP," Bajaj wrote on X.

Also Read: BSE, NSE extend additional surveillance measures, trade-for-trade settlement to SME stocks

Another options trader Rohit Katwal mentioned the possible implications of extended derivatives trading hours. He believes it will finish off a big chunk of the Options Market in India.

“In the last 3-4 years, options have been about quick theta decay or gamma play. This move changes that. Maximum Intraday Algorithms will become obsolete as underlying greeks behavior will change. It applies to NIFTY, BANKNIFTY, FINNIFTY," he wrote on X.

“The move is again intended to benefit Algorithm Traders running proprietary strategies. Like HFT or Greeks Arbitrage strategies. They have the resources to make actual strategies that are based on option models and not some senseless straddle strangle selling," Katwal added.

Also Read: HDFC Securities launches discount broking all-in-one app, HDFC SKY - open for all investors, traders

He believes the move might be great for Intraday Traders only or for people who are busy in their day jobs. It might actually increase retail participation.

“Overall, the move is good for retail participation but bad for existing Options and Algorithm platform. If a conscious trader decides to switch his trading method, then Option Market will be hurt along with many algorithm providers," Katwal wrote.

Meanwhile, Anand James of Geojit Financial Services added that the strength of domestic macros helped indices less troubled by global market volatility.

“In other words, the prospects of even the index derivatives matching US markets blow for blow looks 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," James said.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 26 Sep 2023, 12:33 PM IST