Change in market timings..

Hey do not see..we are changing! Well the NSE and the BSE have decided to change the timings for the market operations from 4th Jan, 2010. Who benefits? Really do not know..but let us see the stakeholders…

The Stock Exchange, Mumbai, was  started as an association – non profit making company – and was supposed to be for the benefit of all its members who helped trade, shareholders of companies to get a two-way quotation, and as a body to make the rules and regulations. This was a 100 year plus institution where words like ‘profit’ and quarterly results and corporate governance were not heard of. However it functioned for a very long time like a club where a few people made the rules and words like democracy were alien. There was a guy famously called the ‘kala nag’ who could bring any company to its knees by going short on the companies shares. One prominent industrialist (who is no more) ended his regime by seeking delivery of shares – which of course he did not have. Settlements were regularly clubbed and the “president” of the exchange made the rules. Rules could be made, broken, re-made and the smaller brokers could get killed in the process. A few prominent communities decided that the ‘President’ would change by an annual rotation!!

Sebi came in 1992 – effectively in 1994- and made some rules. The babudom got offended by the high handedness of the BSE ‘dons’ and the babus created NSE. Nse was a ‘professionally’ run exchange where the brokers had very little say in the management. Of course professionals could be ‘managed’ like the BSE, but the process was more difficult for the not very educated broker to handle the whole process. However enough money was spent on keeping the NSE alive and kicking and soon it spread allover the country – and today it is a successful organisation, originally promoted by IDBI. Now Nse has shareholders who are exerting pressure on the exchange to increase its income. Private Equity holders need a higher revenue, and a higher growth trajectory so that they can get out of the deal. So pushing NSE to increase trading hours (there is no shortage of people who will increase their trading) to increase revenues is a sensible option – and so it is happening. To say this has anything to do with ‘integration with international marets’ is a joke.

Do the brokers have a choice? Unless you know all your clients (which means HNI and institutional clients only) you may choose to open at 10am instead of 9am. However if you are a retail broker, you do not have that choice. One great customer who wants to buy 100 shares of H K Finechem @ market price places an order at 9am with your dealer / voicemail.

Let us say the beginning price (9 am) was Rs. 12, and your dealer executed the order at say 9.55 am at Rs. 14 this client could either accept it or go to SEBI / consumer court and claim ‘deficiency of service’.

Welcome to the world of financial services.

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2 Responses to “Change in market timings..”

  1. “… buy 100 shares of H K Finechem @ 1will …” – why would the dealer buy at 12 or 14? proof reading error or some confusion about how order processing is done???

  2. Ravinder Makhaik on December 31st, 2009 at 8:30 pm

    Money makes the mayor go and so would it be for NSE and BSE, jostling for space to attract the investors attention.

    One spin off from extending trading hours in the morning and possibly in the evenings in the future would be its impact on banking.

    The stress would tell on the banks and maybe they too decide to extend their working hours.

    Soon there would be a demand to reduce the number of holidays and increase the number of trading days, after profits have to nutured and holidays come as a spoilsport.

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