Sebi Chief Cautions Against 24x7 Trading Window, Brokers To Firm Up View By Feb-End

Sebi Chairperson Madhabi Puri Buch expresses concerns over a 24x7 trading window in the securities market, citing infrastructure resilience and risk management. A decision from brokers is expected by February's end, amidst industry debates.
Sebi Chief Cautions Against 24x7 Trading Window, Brokers To Firm Up View By Feb-End

Securities market regulator Sebi on Monday cautioned against a round-the-clock trading window from an infrastructure resilience perspective and highlighted that it has neither heard officially from anyone nor formed any opinion on the issue so far.

A newly formed brokers' body said that a final view on the topic will be taken towards the end of February.

Addressing an event organized by brokers here to finalise an industry standards forum which will act like a self-regulatory organization for the industry, Sebi chairperson Madhabi Puri Buch said though nobody has come to the regulator with a firm view either in favour or against extending trading hours, the limited feedback that she has received so far is that the industry is a divided house on the issue.

"While I personally and the Sebi as the regulator have no view on the subject, as we haven't heard officially from anyone so far, as a regulator we need to look at the market and its infrastructure resilience. Also, the risks that may emanate from longer or 24x7 trading hours," she cautioned.

Buch went on to add: "Can an F1 race track not have a pit stop? If it does not have a pit stop how will the racers stop to change the tyres or refill the tank? Without changing tyres or refilling the tank, how can a race be completed? “These are issues we need to look at while extending trading hours. Because we must ensure that the market infrastructure remains resilient and for the infrastructure to be resilient we need to have lean time to upgrade software and settlement among other important things.

When pointed out that why can't Sebi borrow a leaf or two from commodities markets, she said, "No comparison can be drawn between the two, primarily because of the sheer volume that the equities and equity derivatives markets have compared to commodities. Also, from the market infrastructure evolution perspective, equity markets are way ahead of commodities."

Soon after Buch said so, Nirav Gandhi, the managing director of brokerage JM Financial and also the co-chair of the newly-formed Brokers Industry Standards Forum, chipped in saying, "We are at it and we will have a firm view by the end of next month."

On the Brokers Industry Standards Forum, Gandhi, who also heads one of the 11 ANMI (Association of National Exchanges Members of India) panels that deal with Sebi matters, stock exchanges and clearing corporations, said this will effectively work like an SRO.

Buch joined in saying its regulations will be legally binding as that of the Sebi, though the guidelines will not be issued by the Sebi. Also, the Sebi Act need not be amended to make these changes as it already has such a provision, she added.

Brokers Industry Standards Forum is represented by 30 members from the industry, including brokers, market infra makers like exchanges, clearing corporations, and depositories among others. Buch also said, the public/investors views have already been baked into the standards which will be finalized by the March-end.

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