MUMBAI: The National Stock Exchange (NSE) is set to open trading in Nifty futures contracts at 8.00 am, nearly two hours before the stock market opens for trade.

The move is aimed at reducing the considerable time advantage enjoyed by Nifty futures in the Singapore Exchange (SGX). SGX offers SGX CNX Nifty futures, which are dollar-denominated derivative contracts with Nifty as the underlying.

Sources close to the development told DNA Money that mock trades were underway and the trading could begin as early as Monday next.

Exchange sources, who did not want to be named, confirmed that tests were on, but refused to divulge the exact timing of the launch.

This is the latest in a series of attempts by the country’s largest exchange to protect its business from increasing

competition at home and abroad. Earlier last week, NSE launched the Defty futures
contract, which is a dollar-denominated version of the Nifty, also targeted at the SGX Nifty.

Trading in these contracts commences at 9.00 am Singapore time. Since Singapore is 2.30 hours ahead of IST, this gives a trader nearly 3.30 hours advantage in trading.

Also, trading in the product closed at 6.15 pm Singapore time, almost corresponding with the close of trading in India at 3.30 pm IST.

Volumes have been picking up steadily for the Singapore contract over the month as international traders enjoy facilities such as cross-margining among other products available on SGX, such as Nikkei Futures and MSCI Taiwan, besides the time advantage.

In the past few days, some traders have even started looking at SGX Nifty for cues on the kind of opening in Indian cash markets.

Anand Kuchelan, senior analyst, derivatives and strategy, PINC Research, says, “It would be an advantage. We would not lose out much in gap-up and gap-down openings. For example, the Dow Futures is traded round the clock, any big event that happens when the market remains closed gets factored in the futures prices.”

But, some operational issues could arise, feel experts. When the market opens at 10 am, operations in exchange would commence from 9 am. The early start would mean operations at the exchange and the brokerages would commence from 7 in the morning.
Siddarth Bhamre of Angel Broking says that by giving the most traded flagship contract an early start, the exchange is effectively waking up the entire market early.

“If they make it 24X7, that would be welcome. But I’m not sure if the 8 am start is going to help. The attractiveness of SGX Nifty comes primarily from the easier regulatory norms there and not from the time advantage.”

Deepak Mohoni, CEO, trendwatchindia.com, says, “It doesn’t help hedging. In hedging strategies, one can’t begin mid-way. So, cash positions have to be initiated on the
previous day itself.”

source: Dna India

Tags: calls, daytrading, free calls, intraday, tips

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