Commuting, cost escalation major problems: Members.
Sharvari Patwa
Mumbai, Dec. 22 The proposed increase in trading hours of the Nifty futures on
the NSE does not seem to have gone well with a section of market players.
The request for time extension, which had come from the NSE, needs SEBI's
approval to start the index contracts futures trading at 8 a.m., instead of
9.55 a.m. NSE future is also listed in the Singapore Stock Exchange (SGX),
where trading starts over two and a half hours before NSE. This influences
trade of Nifty futures contract at NSE, some marketmen claim.
"Market participants have been asking for extension of trading hours in index
futures for long and we have sought SEBI's view on the same a few days ago," Mr
Ravi Narain, MD& CEO of NSE, had said on the sidelines of a securities
conference held in the city on Friday. Life is going to be even tougher for all
NSE members, including brokers as trading hours will increase, said Mr Manish
Sonthalia, VP-Equity Strategy, Motilal Oswal Financial Services.
The market timings are good enough and there does not seem to be much logic in
the request for an early start, said Mr Dharmesh Mehta, Head-Broking, Enam
Securities.
"Would we start trading at midnight if Nifty futures got listed on Nasdaq, for
example," he said.
"Just because a product is listed on the exchange of another country does not
mean we work according to those exchange timings," said a head of a broking
firm.
Some also said that this step was bound to create inconvenience for most
broking firms, especially ones with small employee strength.
Another broker said that in Mumbai, it will get very difficult for staff to
come in for work before 8 a.m. "They already start (from home) at very early
hours as it takes on an average at least an hour to commute (to office). Some
have to commute for more than two hours," added another.
This seems quite an unfeasible option, especially with the extra costs
involved, said Mr Rakesh Goyal, Head-Distribution, Bonanza Portfolio.
FIIs and such bigger players, who keep up the volume on such a platform, come
with a certain mindset and work for definite hours and this is unlikely to
change, he said.
With the trading gap between cash and derivative segments, some feel that there
is a possibility of manipulation by operators and punters.
Ms Susan Thomas, Assistant Professor of Indira Gandhi Institute of Development
Research and an expert on Indian financial markets, had said in a conference
last week that the proposed extension is fine as far as spot trading also gets
extended.
"It doesn't sound safe if spot doesn't (have extended timings) but trade and
futures do. At present, since one can be sure that spot prices adjust with the
futures, one can bet futures and instantly take counter positions in cash. But
if you don't have the underlying, there will be an issue," she had said in the
conference held by National Institute of Securities Market.
If the Nifty will go down in the futures trade during the extended trading
markets, then cash markets will open lower and this will bring down the value
of stocks (largely belonging to retail investors), explained a broker.
It is largely the big institutions and large investors who trade in the
derivatives segment and not retail investors, said the head of a broking firm.
So while the arbitrageurs and speculators will benefit from the time extension,
it will be unfair on smaller and retail investors, said an analyst.
But there were those who said the change was welcome.
Singapore Nifty has taken the excitement of Nifty futures away from Indian
markets, said Mr Sudip Bandyopadhyay, Director and CEO of Reliance Money. "We
are now price-takers as India has to follow the price set by the futures
trading in Singapore because they begin early," he added
http://www.thehindubusinessline.com/2008/12/23/stories/2008122351691000.htm
Deeds, like seeds, take their own time to fructify.
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