seni proposal on trading hours: Brokers divided over Sebi proposal to extend trading hours

The chief of the Securities and Exchange Board of India(Sebi) on Monday said there are many divergent and diverse views right now, even among the broking community.

“At the moment, the broking community itself is divided, it’s a divided house, and there is a lot of discussion and deliberation that is going on. They will soon reach some conclusion one way or the other in some reasonable timeline,” Sebi chairperson Madhabi Puri Buch said at a brokers’ forum.

Last year in September, the National Stock Exchange had submitted a proposal to Sebi to allow an evening session, between 6 pm and 9pm, when market participants can continue trading futures and options contracts after the regular session, between 9.15 am and 3.30 pm, is over.

Buch said while regular trading in the commodity derivatives segment is open until late in the evening, the volumes there is much less when compared with the equity derivatives segment.

“This (extended trading hours) is an important issue from a resilience of technology point of view, which constantly needs maintenance upgrade and functionality addition. That is certainly an additional question,” said Buch.

The regulator is also looking at segregation of settlement of retail and proprietary trades to ensure there is no netting of the two categories.“There are some people who are permitting access to their clients through proprietary accounts for a variety of reasons, including wanting to fund their margins,” Buch said.

“The industry has made a representation to us that there are different revenue models that brokers have and some of those models may look like they are misused but they are not. We will analyse all of that in a very balanced way to separate the wheat from the chaff,” She said.

The Sebi chairperson said the Industry Standards Forum(ISF) which is in the pilot stage, would eventually be made part of the permanent regulatory architecture.

“We are planning to have a single framework for all.. be it listed companies, brokers, PMS, AIFs,FPIs.. We have a large number of pilots running, we see tremendous benefit of this,” Buch said at the Brokers Industry Standards Forum.

She added that the regulator would come out with a single framework to recognise the different industry standards forum, which will have a legal standing.

Besides, on the legal sanctity of the standard operating procedures suggested by the Brokers Industry Standards Forum, the Sebi chairperson said the recommendations provided by these bodies would have legal binding.

She said the regulator would issue circulars to state that the recommendations provided by the ISF would have to be followed.