BSE 9.45

CA GIRISH (Chartered Accountant) (1796 Points)

16 December 2009  
BSE in for an early bird advantage over NSE Advances Trade Start Time By 10 Mts To 9.45 AM; NSE Too May Follow Suit Our Bureau MUMBAI IT MAY be behind the National Stock Exchange (NSE) by a wide a margin in volumes, but on Tuesday, the Bombay Stock Exchange (BSE) tried to steal a march over its arch rival by advancing its trading hours by 10 minutes to 9:45 am. The new timing will be effective from December 18, 2009    The move surprised the market, as BSE was perceived to be opposed to the extension of trading hours. Asia’s oldest bourse too made it clear that the latest move was aimed at improving liquidity. “By opening 10 minutes early, we hope to increase the focus on the launch of midmonth derivatives contracts this Friday. This should be looked at in the context of various initiatives taken to bring liquidity back to BSE,” said Madhu Kannan, chief operating officer, BSE.    The exchange has recently got the Sebi approval, to start a new expiry cycle for its stock F&O contracts different from that of NSE. Contrary to market expectations, NSE did not react to BSE’s move immediately.    “We haven’t yet taken a decision on changing (advancing or extending) trading hours. We will do it after consultation with brokermembers,” said NSE officials. But brokers feel it’s a matter of time, before NSE, too, aligns its timings with that of BSE. NSE has a 75% market share in the cash segment, and is a near monopoly in the derivatives segment. On a normal day, it may not lose much volumes by opening 10 minutes behind its competitor.    But on days when the market is expected to react to major developments — local or global — straight away on opening, BSE prices will set the benchmark. For instance, if the circuit-breaker is activated on BSE within five minutes of opening, NSE traders may not get a chance to react. Despite longer trading hours, the block deal window on BSE will open at 9:55 am, till it gets approval from the regulator to activate it at 9:45 am.    The block deal window is used for negotiated trades by institutions, and the deals have to be done in a price range of (negative) 1% to 1% over the previous close. The Sebi rule states that the block deal window can be kept open “for a limited period of 35 minutes from the beginning of trading hours i.e. 9:55 am to 10:30 am”. If prices move sharply during the first 10 minutes of trading, the 1% price band restriction may be rendered irrelevant, thus hampering block deals on BSE.    Further, this may result in hampering the early morning activity in BSE’s block deal window, as after 10 minutes, stock prices may move over from the ruling market price/previous day closing price. As per rules, orders may be placed in this window under these parameters.    Sayee Srinivasan, head of products strategy at BSE, told ET that the exchange is talking to Sebi on operational issues and is hopeful that it will receive permission to open the block deal window at 9:45 a.m.    But not everybody is sure whether the move will help the bourse increasing turnover. “Unless there is enough liquidity, nothing much will change,” says Vikram Bhatt, director, Ajmera Associates. “This is purely an academic exercise to satisfy those who want to extend market timings. Indian bourses want to ape global exchanges by increasing the trading time to boost their turnover. But they should look at Indian realities.”