NSE accounts for about 90 % market share in equity derivatives in India. It is India’s top stock exchange and asked its clients to get ready for midnight trading. NSE is looking to start a second trading session .The plans to start extended trading subject to approval from the regulator some time in October, it said in an email to clients.
In May this year, SEBI had allowed stock exchanges to hold trading in derivatives between 9 am and 11.55 pm, nearly 7 hours more than now.
There shall be two trading sessions with a break of about 60-90 minutes.
The first session would be between 9:15 a.m. and 3:30 p.m.
And the second trading session between 5:00 pm and 11:55 pm, only for equity derivatives,after 3.30 p.m.
It is not clear whether trading will be held in single-stock derivatives. Or only index derivatives in the absence of a cash market during the second session.
According to the framework, session has mentioned in two parts:
1. First Session:
The exchange would allow trading to continue from the previous day’s second (evening) session. That’s because it doesn’t want its members to settle trades in the night. Moreover, there would be thin trading on most days in the night, said a senior NSE official on condition of anonymity.
Trade modification will be allowed till 4:00 p.m. and all orders outstanding after 3:30 p.m. would be cancelled, as is the case now. More details would follow in a separate circular, the exchange said.
2. Second Session:
The exchange would issue a separate circular to confirm the timings after getting approval from the regulator. The second session will start with fresh orders at 5.00 p.m.
On the last day of the contract— at last Thursday of the month—next month’s contracts would be eligible to trade.
The exchange will allow trade modification till 11:55 p.m. All outstanding orders after that would be cancelled.The exchange will allow all trade records to continue in next morning’s session as they do not see enough business post regular trading hours to compensate for the additional operating costs they will have to incur.
Extended trading will be a included by the NSE’s entry into products currently available in commodity derivative exchanges as the regulator has allowed unified exchanges starting October. There are also concerns on how effectively an equity derivatives market will work in the absence of a functioning cash markets.