Call for derivatives trade till midnight

Mumbai: The National Stock Exchange (NSE) is understood to have sought the approval of the Securities and Exchange Board of India (Sebi) to extend the timing of derivatives trading till almost midnight.

In May, the market regulator had extended the trading time in equity derivatives till 11.55pm and it had said that the revised timings will be effective from October 1. Currently, trading is allowed from 9.15am till 3.30pm.

Derivative is an instrument whose value is derived from the value of the underlying asset. The underlying asset can be securities, commodities, bullion or currency.

There are two types of derivatives contracts - futures which is a legally binding agreement to buy or sell the underlying security on a future date; and options which gives the buyer or holder of the contract the right (but not the obligation) to buy/sell the underlying asset at a predetermined price within or at the end of a specified period.

Sebi had said that its approval is subject to the stock exchanges and clearing corporations having in place a risk management system and infrastructure commensurate to the trading hours.

Sources said the country's largest bourse has communicated to its members about the intention to extend derivatives trading.

The second session is likely to start at 5pm and end at 11.55pm. They added that the Bombay Stock Exchange may also have to extend its timings from October 1.

The extended timing is akin to the trading hours for commodity derivatives segment, which are now fixed between 10am and 11:55pm.

National Stock Exchange of India Ltd (NSE)