SEBI, the capital and commodity market regulator has decided to increase the trading time in the commodity derivative segment only. The time is extended by an hour to spread the commodity derivatives market and also enhance the part-taking of stakeholders which includes foreign entities and farmer-producer organization.
For agriculture and agri-processed commodities, the trading hours will be from 9 AM to 9 PM. And for non-agriculture commodities the trading hours will be from 9 AM to 11:55 PM.
SEBI cleared that it has decided to extend trade time and recognized stock exchanges are to adjust to set up their trading hours only for the commodity derivatives segment. It is on the condition that there shall be enough volume.
Increased hours are in line with the recommendations by Commodity Derivatives Advisory Committee. In the past for non-agriculture commodities SEBI had fixed time from 10:00 AM to 11:55 PM and for agriculture commodities, it was from 10:00 AM to 9:30 PM.
Furthermore, SEBI added that the extension of the trade time is subjected to clearing corporation and stock exchange. They will have to put in place adequate risk management system, enhance their surveillance system and provide an adequate infrastructure that will match the increased trading hours. The provisions of the issued circular will come into effect from 30 days of the circular publication. Exchanges and clearing corporation will have to make needed amendments to the rules and regulations. The stock exchanges are directed to bring this to the notice all the stock brokers.
According to few brokers, the move to increase time will, double the cost for broking firms as they will have to employ staff in two shifts.
Another point is permitting foreign entities directly to participate in the Indian physical commodity derivatives market. Even if they export or import available commodities to/from India.
It is observed that morning moves are usually between 1:00 PM to 1:55 PM and evening moves start from 5:30 PM to 6:30 PM. Between 6:30 to 7:00 PM there are sudden reversals. Profit booking time is 8:15 to 8:30 PM and by 8:55 PM is the final exit time.
Because of the high volume New York session is good for commodity trading activity. It matches with the IST of between 6:00 PM to 10:00 PM. According to IST London stock exchange timing is from 1:30 PM to 10:00 PM. Most of the important fundamental news and reports are released during this time.
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