On 14/12/09, Bombay stock exchange , India announced extension of trading time by0.15 minutes i.e. from 9.40 am IST instead of 9.55 am IST. This is done in order to catch up some business of NIFTY trading in Singapore stock exchange. Another competitive National Stock exchange in India announced on 15/12/09,extension of 1 hour trade instead of 0.15 minutes. i.e. trade will start from 9.00 am IST and BSE also followed suit. They informed SEBI and public and brokers that the revised timing will be effective from 16/12/09 in order to catch up more business.
There was chaos among broking community and vociferous protests were heard throughout India against the revised timing. Nearly 70% of brokerage firms were against the new timings and called NSE and BSE board of members as senseless to the reality and are doing all these changes without any discussion with all the aggrieved. The arguments put forward by them against the new timings are:
1. There will not be any sizable extra revenue for the stock exchanges. Only business will be brisk for the first hour and rest of the time it will be dull and flat except closing time.
2. In Metros, the employees of stock brokerage firms have to start from their house right from 6 am to reach the office by 8 am so that they can start their operation by 9 am after doing some preliminary preparations. So they are inconvenienced due to disturbance in their routines thus they have to sacrifice one hour from their family timing for business.
3. The employees have to be paid extra money or they have to work without any additional compensation. At a stretch to work from 9 am to 3.30 pm will create lot of health problems.
4. 2 days time is insufficient to make the infrastructure ready for the show.
5. Linking of banks with stock broking accounts will be difficult as most of banks still follow 10 am work syndrome. So banks have to be convinced to start bank operation from 9 am.
6. Extra overhead like A/c , lighting etc. will add up costs and there will not be corresponding increase in revenues.
7. NIFTY related business diverted to Singapore exchange is meager. If advancing time will catch that business of Singapore exchange, then there is no end for such type of arguments and we cannot open our exchanges throughout 24 hours to catch all world business. It is ridiculous to extend timing.
Seeing the plight of stock brokers, SEBI called both exchanges in india and discussed the matter. Both the exchanges agreed to implement the timings from 4th of Jan 2010. The arguments put forth by the exchange authorities are as follows:
- Increase in time will help to generate additional business. The business meant for India should not be left out to other national exchanges like Singapore exchange where sizable India related NIFTY business is diverted.
- All over the world, the timing of trading is greater than India. India should come up and go along with the world so that they can have global business. It is similar to global business mergers and acquisitions done by Indian industry players.
- Only in India, there is lot of holidays in stock exchange. So we are in fact losing sizable business due to this.
- Indian public are receptive to new timings and welcome the same. Public in general can trade before going to office and it will enhance the revenue of stock brokerage houses.
- Due to various type of business like shares, derivatives, currency, commodity, public wants to spend some time in stock market before starting to do some other routine works. Even mutual fund deposits, gold bonds, debt bonds are all dealt by brokerage firms and doing it online gives them lot of freeness as compared to the position of relying on brokers after office hours.
- In metros like Mumbai, Chennai etc, already employees in software industry are doing work from 9 am to 7 pm . Why others cannot do like that doing 10 hours of work for the sake of national growth. If necessary, 30 minutes break can be given for lunch and relaxation.
- Banks also will modify the timings once they feel that they will get business. Since all works are done by the use of the software programmes, there will not be any problems. Many banks are opening at 8 am like ICICI bank. The govt banks also should come forward to imitate private banks to catch up business. So linkage of banks with stock broker accounts and clients will not be a major problem.
- The extension of date from 16.12.09 to 4.01.2010 will give ample time for linking up of the accounts by banks.
- SEBI advised exchanges already to devise means to extend trading hours from 9 am to 5 pm whereas the present extension is only from 9 am to 3.30 pm.
10. 90% of public are after the extended trading hours and less holidays as money can be taken out as and when necessary. During bank holidays, how the stock brokerage firms worked without any problem?
So the arguments for and against for extension of trading time has taken much of the time of experts and stock brokerage firm leaders. It appears for me that the extension of timing is a welcome move which will make us globally competive. As pointed out by some brokers, if need be, the stock exchange can work 24 hours just like BPO covering international stock trading covering trades of other nations currencies, shares, loan papers, gold futures etc. which will help us to generate employment. Think about employment bubble. If software /BPO industry cracks, then there will be severe strain on Indian Govt to feed millions or face unrest and unemployment and increase in dacoity and robbery including terrorism.
Let Better sense prevails on stock broking community.
C R Venkata Ramani