Longer Trading Hours Can Open Indian Markets to the World

The introduction of the long-deliberated closing price auction session to determine closing levels auction session to determine closing prices in the equity segment is being hailed as a significant market microstructure reform, aligning Indian market practices with global standards. Despite concerns over price divergences, thin participation, low volumes, and operational challenges, the closing price auction mechanism fills a critical gap in Indian securities market practices. However, amid waning FPI inflows into equities and declining weight of Indian stocks in emerging market indices, the regulator may have missed a more consequential opportunity to reform securities markets. 

Widening Access to Securities Markets
Trading hours shape market dynamics across participation, liquidity, spreads, and volatility. Critically, they assimilate global news, corporate disclosures, macroeconomic events, and investor sentiment into the price discovery process. At a time when global exchanges are reconfiguring operating models to support extended trading hours—including overnight sessions and formats such as 24/5, or 23/5 trading—SEBI overlooked the chance to recalibrate trading windows across market segments while incorporating closing auctions. 

The equity-cash segments of European exchanges typically offer around 8.5 hours of continuous trading: the London Stock Exchange trades from 8:00 am to 4:30 pm, while Deutsche Börse, Euronext and the SIX Swiss Exchange operate from 9:00 am to 5:30 pm. By contrast, Indian equity cash and derivatives markets operate for less than 6.5 hours. Even the Singapore Exchange offers a seven-hour window across two sessions, excluding a mid-day break.

Global Wave of Extended Trading
In the US, alternative trading systems provide overnight access to US-listed equities for global investors. NYSE Arca is targeting the launch of extended-hours trading in December 2026, subject to certain market-infrastructure dependencies. NYSE and NASDAQ currently operate 6.5-hour core session (9:30 am - 4:00 pm), along with pre-market (4:00 am - 9:30 am) and post-market (4:00 pm - 8:00 pm) sessions. Meanwhile, clearinghouse DTCC is ready with a 24/5 extended clearing model to support overnight trading activity. The London Stock Exchange too plans to launch a 24/5 trading venue, called LSE 24, in the first half of 1 2027, initially supporting digital, algorithmic, and agentic trading in exchange traded products.

Loosening the Guarded Regulatory Stance
If policymakers and SEBI’s thrust is to enhance global investor interest and participation in Indian markets, they need a focused drive to ease market access and lessen restrictive operating conditions on trading platforms. Indian securities markets need a well-formulated harmonisation of disparate trading hours across equity cash and derivatives as well as commodity and currency derivatives segments. Extended trading hours increase overlap with global markets and provide international investors flexibility to react to market events beyond traditional sessions, instantly access liquidity and managing portfolio risk across time zones. 

After commodities derivatives came under SEBI’s purview, stock exchanges were permitted to trade commodity derivatives along with other segments. Its May 2018 circular allowed equity derivatives trading hours to align with commodity derivatives (9:00 am and 11:55 pm per November 2018 update), subject to stock exchange and its clearing corporation ensuring risk management and infrastructure safeguards. However, SEBI reportedly rejected NSE’s 2024 proposal for a phased extension of trading hours in both equity cash and derivatives segments. 

Contours of Extended Trading
Time-tested market practices and technological capabilities in commodity derivatives—operating eight hours for other agricultural commodities, 12 to 12.5 hours for internationally referenceable agricultural commodities, and 14.5 to 15 hours for non-agricultural commodities—offer a resilient operational template. 

The key question is how trading hours in equity cash and derivatives should evolve. 

The first step should be an eight-hour equity-cash and derivatives session, aligned with other agricultural commodities. Existing trade and post-trade infrastructure, market-information systems, risk controls, surveillance and regulatory oversight suggest that such an extension should be manageable. 

Any subsequent move should depend on evidence of sustained volumes, liquidity, market depth, a broad participant base and orderly volatility.  A subsequent extension to a 12- to 12.5-hour window could then align trading hours with those for internationally referenceable agricultural commodities. 

Whether Indian markets should extend beyond 12-12.5 hours and adopt overnight sessions appears premature at this stage. Such a move would demand substantial investments in operations, market infrastructure, and regulatory oversight capacity. 

Market Readiness
Extended trading can be justified only by commensurate investor interest and market activity beyond traditional hours, while preserving market integrity and stability. It also requires consistent rule-making to align trading, clearing and settlement cycles, corporate actions, while reckoning prefunding, forex, risk management, and compliance implications. 

The equity derivative segment has witnessed subdued activity since the October 2024 regulatory tightening, constraining brokers’ financial performance. Despite SEBI’s December 2025 Single Window Automatic and Generalised Access for Trusted Foreign Investors, or SWAGAT-FI, framework easing onboarding for low-risk, trusted foreign institutional investors, inflows remain muted amid global financial volatility. 

Beyond equity, the absence of a consolidated corporate debt liquidity pool— with activity fragmented across online bond platforms—diverts business from brokers while limiting market depth and weakening investor interest. In this backdrop, brokers would be less enthusiastic to invest in new infrastructure and operating costs without clear visibility of increased flows. 

Regulatory Alignment on the Evolution of Financial Markets
Although the Payment and Settlement Systems Act excludes exchanges and their clearing corporations, the central bank’s views on payment relating securities markets transactions under extended hours will be crucial in shaping regulatory oversight. Also, cross-regulatory alignment—particularly synchronizing trading hours in interbank dealings across G-sec, money market, repo, and forex segments regulated by the RBI—can be a crucial imperative to enable referencing of broader financial market direction and sentiment. 

Strengthening corporate bond markets requires regulatory alignment amongst SEBI, RBI and MCA, enabling unified guidelines to reduce complexity and drive broader participation. Also, a critical aspect of structural reform is addressing the long-standing issue of direct settlement links with international depositories across equities and bonds.

Greater overlap with GIFT IFSC exchanges, already operate for 22 hours across two sessions, could help create interconnected market systems that support efficient hedging, speculation and arbitrage. Any such integration should proceed under carefully calibrated capital-control, settlement and risk-management norms.