Protest against extended timings mostly hot air

Q Can you give some background of extension of trading time when NSE
was formed?
Before NSE went live, BSE used to trade from 12 to 2. Only two hours. There used to be Christmas holidays. Exchanges used to be shut down. All brokers used to go on long holidays. That was the state of affairs. There used to have plenty of holidays in a year. I was personally against all such practises. If you look at all other markets, they don’t shut down like this. In fact, you get annoyed if a grocery fellow close even on one day in a week. And he starts from morning to evening. Grocery trade or a mall, we believe in longer trading. So, that’s why, I strongly believed that we should have longer hours in stock market. But, we need to begin somewhere. So we started trading from quarter to 10 a.m. But the first 15 minutes was the pre-opening session. And then up to 3.30 p.m. So, right from day one we began with more than 5 hours trading.

Q What was the reaction from market at that time?
Many people laughed at us. Since we are a new exchange, they said we are doing all gimmicks. But our basic concept was that investment is also a product – people are buying and selling. Why should there be a limited number of hours. If offices are open from 10 am to 5.30-6 pm, similarly, professions should also be like that. That’s why we started longer trading hours. And, subsequently, I was in favour of extending trading right up to 5.00-5.30 pm. But, brokers were tooth and nail against it. And we were doing so many other things. So, we did not pursue it.

Q Now the argument is that Singapore Exchange is taking away volumes from India. What’s your view?
Actually, it was during my career at NSE, the exchange entered into an agreement with Singapore Exchange to trade Nifty futures there. In the beginning, it was not popular in Singapore. As the Indian economy started gathering steam, foreign investors became more interest in Indian listings, and Nifty trading picked up in Singapore. And, by geographical location – they being East 2.30 hours ahead of us – they always start trading early. Even when futures market picked up in this country, still Singapore used to attract lot of volumes in Nifty futures.

Q Is that the reason for NSE to approach Sebi for extension of trading hours?
Instead of our volumes increasingly going to Singapore Exchange, it has become necessary for NSE to attract volumes. But, some volume that is on the Singapore Exchange will continue to be there because foreigners have lot of advantages in dealing with a free country like Singapore, compared to ours where we have lot of foreign exchange restrictions. But, still we feel we should attract volumes. So, NSE approached Sebi and it gave final permission to start trading from 9 am to 5 pm.

Q But, brokers were against it?
There was a huge brokers’ lobby again. They created lot of noise, so NSE decided to go slow on that. But then BSE took the initiative by advancing trading by 10 minutes. So, NSE felt that if they have gone ahead and declared 10 minutes earlier, this game of advancing the trading timings will start. Suppose, NSE starts 9:30 am, they will say 9.20 am. So, the best things is to say 9.00 am, which is approved by Sebi. Below that BSE will not go. But, very frankly, lot of noise that brokers are making there is some substance, but bulk of it is hot air. Substance is related to banking system. If they also expand their hours in which money can be transferred from one account to the other, the problem can be solved. The rest of it is all IT (information technology). Today, trading system is not such that we handle paper. Everything can run on IT and STP (straight through processing). So, I think you can handle longer trading hours. It is not difficult. The only issue is that you must have shift system for employees. At Clearing Corporation of India (Patil is now chairman of CCIL), we do inter-bank forex settlements. We have to handle right from yen to dollar. Yen opens earlier and dollar closes later. We also have to maintain something like a shift system here. Brokers will also have to think of something similar.