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And chances are as an active market participant, equity investor or simply as a witness to the day when for the first time the markets opened at 9 am, you are becoming a part of the history.
On the face of it, a 9 am opening bell may not change lives, except that market participants would have to start work an hour early and for the rest of us, the ticker will come alive 55 minutes earlier.
But deep down, the move could potentially result in multiple benefits higher volumes for stock exchanges, better price discovery and lower impact cost for investors. The move to open Indian stock markets 55 minutes early marks the beginning of the next phase of integration with global markets with the potential of benefitting all market participants
THE National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have entered a phase of competitive trading. This cut-throat race between the bourses for a bigger share of the capital market pie could bring in many more changes in the way we invest and trade in equities.
The cost-benefit arithmetic is still being worked out. But it seems the move will bring in immediate benefit to only a small minority, the arbitrageurs, for whom every extra minute of trading can spell money.
Over time if volumes pick up, as the stock exchanges seem to believe, it would mean extra bucks for all active market players.
The pursuit of bigger volumes is behind this increasingly acrimonious competition between BSE and NSE. Sometime last year, the NSE made a request to market regulator Securities and Exchange Board of India (Sebi) to allow extension of trading hours. NSE said it was losing out business to Singapore Stock Exchange, which also offers trading in NSE Nifty Futures Index, as it opens two hours earlier than the Indian market.
In October, Sebi allowed the bourses to set their trading hours between 9 am and 5 pm on the condition that appropriate risk management systems and infrastructure are put in place. Last month, BSE stole the thunder by becoming the first to announce a 10-minute early opening of the market. NSE followed suit and declared that it would open an hour early at 9 am. The BSE then quickly aligned its timing with it.
Weeks before that, BSE had adopted a different trading cycle for its futures and options segment, advancing it by a fortnight in a bid to wean away investors from NSE and kicking off the competition.
The bourses claim the extension of trade timings will lead to an increase in volumes in domestic stock markets. But not many on the Street feel the same way. "We think advancing of timings will help little to boost volumes in the exchanges," says Motilal Oswal Financial Services managing director Raamdeo Agrawal.
Vice-president of Karvy Stock Broking Ambreesh Baliga says volumes may improve, but not more than 5-6 per cent. "On Singapore Stock Exchange, volumes are driven mainly by foreign institutional investors, who trade in futures before the Indian markets open.
Most of them are based there and they have limited scope to participate in Indian equities directly after the ban on participatory notes. I wish Sebi had gone into the real reasons when NSE sought extended trading hours," said the executive director of a top broking house, requesting not to be named.
The Singapore bourse opens ahead of India and trading is held in two sessions between 9 am (6.30 am IST) and 12.30 pm and 2 pm and 5 pm (2.30 pm IST).
Broking houses have not been enthusiastic about early opening of the market but have had no option but to fall in line with the decision taken by the exchanges after initial resistance.
"Kotak Securities is ready to service its clients for extended trading hours. Our customer service is available from 9 in the morning till 6:30 in evening. We have made essential changes regarding infrastructure and manpower. We are a customercentric organisation and our main focus is to meet the requirement of the client," executive vice-president of Kotak Securities B Gopkumar said. Kotak Securities offers `call and trade' facility in nine regional languages.
"We are left with no option but to start our terminals sharp at 9 am.
We have told our employees to come early by 45 minutes. The decision may bring in some pressure on the lifestyle of our employees," Baliga said.
"As a leading clearing and settlement bank for major stock and commodity exchanges, HDFC Bank has the necessary infrastructure, systems and capabilities to support the extended trading time. In fact, we are already supporting the exchanges in currency and commodity derivatives trading and our support/capabilities have been augmented to meet the new requirements of extended trading time. It will definitely help if other enablers in the eco-system are also geared to meet the new requirement," senior vice-president and head of capital & commodity markets of HDFC Bank Shailesh Sukhthankar said.
"We don't expect it to have any major bearing on our running cost in the short run. However, because of this, our staff may be stressed to some extent. We have already asked them to come an hour before the trading starts, which means they have to leave their homes, an hour before. We will try and look at different options to reduce the stress on our staff and at the same time we would make sure that our clients will not suffer due to this," says Agarwal.
As for the common investor, it will take time for early opening of exchanges to sink in. Over time, investors have to figure out how they can make the most of the changes.
Theoretically, a rise in trading volumes helps markets mature, ensures better price discovery and cuts impact cost .
However, a trend analysis of the Indian market shows that trading volumes are concentrated at specific times such as at the opening of the market, at the opening of the European markets (2.30 pm IST) and during the last hour of trade.
This being the case, extended trading hours may not really lead to any significant rise in volumes.
Also market studies show the longer the trading hours, the lesser the depth of the market. In simple terms, this means extended trading time may not really help expand the market breadth.
Will extra hours of trading make the market less volatile?
"I think the market will be less volatile as our timings will now be closer to Asian markets. Earlier we were two-and-a-half hours behind them," India country head of Morningstar Aditya Agarwal said.
According to Unicon Financial Intermediaries CEO Gajendra Nagpal: "The change in timing will not help reduce volatility in the market." However, Agarwal felt that the extended timings may add some volatility. The less volatile the market, the better it is for retail investors.
Many market analysts see other spin-off benefits from extended trading hours. The extension of market timing is being seen as the first step towards aligning our capital market with the global market system. FIIs drive Indian markets today.
Even today, more often than not, domestic investors tend to take positions in the market on cues of FII response to previous night's US market. It would, therefore, help if our markets move closer towards assimilation of economic information that flow in from global markets.
In the US and in most European markets, derivatives trading is conducted round the clock. In some other exchanges, trading in derivatives is conducted for 10-15 hours a day. That way, Indian markets are still far away from world standards, still trying to catch up with their Asian peers.
Around the same time we started opening our markets early, Tokyo Stock Exchange launched a new trading system that allows processing of trades in 5 milliseconds, 600 times faster than the two to three seconds needed on the system used in Indian markets.
This signifies the standing of Indian markets vis-à-vis world markets and the distance they have to cover to catch up.
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