With the Securities and Exchange Board of India allowing the extension of trading time by two-and-a-half hours, stock brokerage companies fear loss in productivity. However, they expect a rise in volumes simultaneously, at virtually no big rise in costs.
At present, trading hours are from 9:55 am to 3:30 pm. SEBI has allowed exchanges to start trading by 9 am and continue up to 5 pm. Most of the brokers have welcomed SEBI's move, as it may result in higher volumes. "It will be stressful. It's hard to be at the terminal continuously for eight hours. It will impact their productivity," said the executive president of a leading brokerage house.
In agreement with this, another brokerage head said long trading hours would demand shift mechanisms for employees. "Productivity could take a backseat because, due to long hours of trading, required time for analysis of the market movements will be squeezed," he added.
"It is not a welcome move, as hours are anyway longer compared with global standards and that, too, without a break. Majority of global markets are live during Indian time, except American markets that would not open before 5 pm. So, global investors get to trade India real time," said Dharmesh Mehta, head (Broking), Enam Securities.
He also raises the human aspect of the move. "Long hours in front of a computer are not advisable on health grounds and will add to the stress level, which has been high in the past few years due to global volatility. Most of the volume rise is expected in metros, especially in Mumbai."
Some brokers are considering shifts and change in timings. Those who do back-office work would have to come late and stay late. Delivery of contract notes, margin statements, etc will also be delayed.
However, the only positive aspect would be "it would provide us an opportunity to do more business at marginal or no cost impact," said Dinesh Thakkar, CMD, Angel Broking.
Dharmesh Mehta, however, does not fully agree. "Cost of trading will move up, as higher margins would have to be kept, as banks won't work all these hours and the basic infrastructure will not in place," he said. The margin pressure on stock brokers would be tremendous. If the markets fall 500 points between, say, 4.30 and 5 pm, then it would become extremely difficult for brokers to arrange for large margins, because banks in the country are often closed at this time.
