Monday November 2, 02:23 AM

Source: Indian Express Finance

Effects of longer trading hours

By Dhirendra Kumar
For about a year or so, Sebi has been on a revolutionary mode. After numerous changes in the way mutual funds are operated, sold and invested in, Sebi has now set its sight on the stock exchanges. In its latest move, Sebi has permitted stock exchanges to have longer trading hours. Currently, stock exchanges are open for trading of stocks and equity derivatives from 9:55am to 3:30pm. But now, with Sebi s permission, the exchanges can trade from 9am to 5pm. This announcement was made last week and since then, a number of reports have come out, arguing about the changes that the longer trading hours will lead to. Business publications and channels have speculated over how this move will impact investors, traders and companies. Well, not one to be left out, I decided to do the same. As far as I can see, the biggest beneficiary of the extended hours will be business channels. A massive 45% increase in their primetime hours means more ad slots to sell and that too, without any extra content to generate. Other beneficiaries will be chemists; longer days at the bourses will lead to higher levels of stress, which means higher antacid sales. The same can be said for stress-relieving centers, although I doubt if any trader visits them. And coming to the traders, they will finally be able to have a 9to5 job. Day traders will be able to leave home and come back with regular office-goers, making it easier for them to show everyone else that their s is a regular profession as well. That said, this move will have its adverse effects as well. Restaurants and coffee shops in business areas will lose out on daytime customers because once the trading is over, it ll be time to rush home. Book keepers will have longer working hours, something I m sure their families won t welcome that easily, hence making them make up for it more expensively on weekends. The one category of people associated with stock exchanges that won t be affected at all will be the investors. Investors will be able to trade more, that s it. In actuality, the extended trading hours are something internal to the broking business. More trading will lead to more business for brokers and exchanges. Apart from that, some businesses that have the Indian exchanges have lost to Singapore will probably come back. There will be longer overlapping of trading hours with Asian exchanges in the morning and European ones in the evening. This will eventually add to intraday volatility. While Sebi has permitted longer hours, what it should have done with it was have a say about mid-day breaks as well. Matching trading hours with Asian counterparts is fine, but we should learn from them and have breaks as well. Tokyo breaks from 11am to 12:30pm, Singapore and Hong Kong from 12:30pm to 2pm and Shanghai from 11:30am to 1pm. None of them have break-less trading, and we shouldn t too. Day-long trading is a Western concept with Frankfurt trading non-stop for 11 hours. That s something we Indians certainly don t need. The author is CEO of Value Research