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Mumbai, Nov. 12

Brokers seem to have shown the thumbs down to the extension of stock market timings allowed by SEBI last month.

According to a survey conducted by Association of National Stock Exchange Members of India (ANMI), a majority of the brokers are not in favour of extended market timings.

Sixty two per cent of the 395 member-stock brokers who participated in the survey said they did not want market trading timings to be extended, Mr E.M.C. Palaniappan, President of ANMI, said. The broker community is apprehensive of extension of trading hours as the banking and ancilliary infrastructure for such trading is still not in place, said Mr Palaniappan.

Of the rest who preferred an extension of market hours, 83 per cent said they would like the markets to close after 3:30 p.m., according to the survey; 63 per cent were in favour of the markets opening before 9:55 a.m.

The current market hours extend from 9.55 a.m. to 3.30 p.m. Stock market regulator SEBI, in October, provided for longer trading hours for stock exchanges, allowing the bourses to extend market hours by around two-and-a-half hours between 9 a.m. and 5 p.m.

A section of the broking community also feels that their cost of operations will increase, although in some cases this could be compensated for by an increase in trading volumes too, added Mr Palaniappan.

The fact that brokers would have to report to office earlier than usual and leave even later for home is also a major concern, said a broker who had participated in the survey.

The original proposal for extension of market timings had come from a stock exchange, a broker associated with the process said. A section of brokers wanted such an extension, but the majority did not, he added.

"We are going to meet both NSE and BSE with regards to the survey that we have conducted and the approach we need to take on this issue in the future," said Mr Palaniappan.

The purpose of the said move is claimed to be to improve the depth of the market, better price discovery and improve price integrity, said brokers.

A report by broking firm Asit C Mehta Investment Intermediaries said that "better depth comes out of improved volumes at a given time. Volumes are more often than not driven by price movements, which depend on news and events. In fact, the aggregation of orders will be less, which could increase the impact cost since orders will be more wide spread". Hence, longer trading hours may mean higher total volumes but not necessarily better depth or liquidity, the report concludes.

No synchronisation

According to the report, if the purpose of having longer trading hours is to enable trading depending on developments in other markets, this may or may not yield the desired result. For e.g. if another market is Singapore, Indian markets would be neither matching the opening and closing time nor the volumes. The Singapore markets function between 9 a.m. to 12.30 p.m. and 2 p.m. to 6 p.m. That translates into 6.30 a.m. to 3.30 pm (IST). Hence opening of the Indian markets at 9 a.m (11.30 a.m. Singapore time) does not translate into synchronisation of the markets.

"Secondly the Indian markets have only occasionally followed the Singapore trend and we have movements that are against the trends set by Singapore. Hence that market does not serve the purpose of leading the world in Nifty," the report says.

Quality of service

Another issue that might arise, according to the report, is that "working from 6.30 a.m. to 6 p.m. would take a toll on the quality of advice given by these experts. It is not optimal to work in shifts either. One needs to be involved in the total market activity. No dedicated trader or market follower can be weaned away from the market when it is alive."

Finally, according to the report, the investors will have higher impact cost and all service providers will have higher operations costs. The exchanges may benefit by due to higher volumes resulting in higher revenue from transaction fees. A cost-benefit document covering all participants should be published by exchanges before actual implementation of the extension of the market timings, the report said.

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