Dec. 17 (Bloomberg) -- Bombay Stock Exchange, Asia’s oldest bourse, extended its trading hours for the second time in as many days to regain its market share as India’s two largest exchanges compete to boost trading volumes.
The Bombay bourse will open at 9 a.m. from Dec. 18, matching the National Stock Exchange’s new timing announced yesterday. The BSE, which began trading futures contacts in 2000, announced on Dec. 15 it would add 10 minutes to its trading day to expand its derivatives business and compete with the National Stock Exchange, the world’s largest single stock futures market.
The 17-year-old National exchange, partly owned by the NYSE Group Inc. and Goldman Sachs Group Inc., has been winning market share from the older rival, which is backed by Deutsche Boerse AG and Singapore Exchange Ltd. Average share trading value on the exchange founded in 1875 declined 14 percent this year, while it increased 6 percent on the national bourse, according to Bloomberg data.
Without the new trading hours, “all the business will go to the NSE, which we couldn’t let happen,” Sayee Srinivasan, head of product strategy at the BSE, said in an interview to Bloomberg-UTV yesterday. Starting at “9 a.m. is a completely different story. We will just have to live with it.”
India’s market regulator on Oct. 23 allowed stock exchanges to extend trading from 9 a.m. to 5 p.m., adding 2 hours 25 minutes to the day. Bourses won’t extend until there’s a consensus on timing and most market participants oppose the change, Ravi Narain, chief executive officer at the National Stock Exchange of India Ltd. said last month.
‘A Bit Early’
The National exchange, which licensed its benchmark S&P CNX Nifty Index to Singapore’s bourse, proposed the extension to narrow the gap between share trading in India and overseas. The plan isn’t linked to the Singapore Exchange’s license, the bourse said in March.
“It is a bit early for the market participants,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi. “But it will benefit small traders who did not have access to trading of the Nifty futures on the Singapore exchange.”
The two exchanges trade for five hours, 35 minutes a day. That compares with four hours on the Shanghai. Developed markets already trade longer hours. The Deutsche Boerse is open for 8 1/2 hours while the New York Stock Exchange trades for 6 1/2 hours.
Abandoned Plans
“The surprise is that the stock exchanges gave investors so little time to adjust to the new timing,” Vikas Pershad, chief executive officer at hedge fund Veda Investments LLC, said over telephone from Chicago. Still “the move is likely to benefit investors in the long term. Over time, we may see a migration toward continuous trading.”
The Bombay exchange’s investor Deutsche Boerse, operator of the Frankfurt Stock Exchange, and Turquoise, an equity dealing system, abandoned plans for an earlier start last year after pressure from customers to leave trading hours unchanged.
The extension may mean “we will have to work in two shifts,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., a publicly traded equities research provider in Mumbai.
The Bombay exchange began working on becoming more competitive after the younger rival started trading shares in 1994. Within a year after the National Stock Exchange initiated on-line trading, the Mumbai stock exchange moved from the open outcry system to computers. The exchange also became the first to trade in index futures contracts on June 9, 2000.
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