Trading Hour extension: Is corporate governance an issue?

by News Center, December 17, 2009.

In an interview with CNBC-TV18, ENC Palaniappan, President of ANMI, Jim Shapiro, Head of Marketing at Bombay Stock Exchange (BSE) and Deena Mehta, Managing Director of Asit C Mehta, spoke about the extension in trading hours.

Here is a verbatim transcript of an exclusive interview with ENC Palaniappan, Jim Shapiro and Deena Mehta on CNBC-TV18. Also watch the accompanying video.

Q: What is AMNI’s view? Is if fair that in 24 hour notice you are asked to start trade at 9 am or are you opposed to that move in principal?

Palaniappan: It’s very difficult to operate within the 24 hour notice as people have to get ready at offices. Therefore, it is going to be extremely difficult for brokers to operate in this manner. Things have moved very rapidly in the last couple of days, which is totally unexpected. According to me, it’s going to take a little bit of pressure on the brokers to deal with this.

Q: How do you deal with this? Is there any way of protesting or talking to the NSE that say don’t do it and try to persuade them because almost all brokers and participants seem to be opposed speaking off the record, yet the NSE says it was the decision taken with consensus?

Palaniappan: The market is divided on that issue. There are people in the market who are in favor of the extension. However, there are some who are not in favor of it. The first one was fired by Bombay Stock Exchange (BSE) with a ten minute extension. I don’t know how they perceived that other exchanges will not respond to it. They should have perceived that other exchanges would respond to it and probably with such a longer extension.

Historically, if you look at it we are used to uniform timings across the markets. Timings have been set in a constituted fashion with consensus. So this time it’s a ten minute extension without consensus and consultation. Other exchanges had to react to it because it cannot let its investors down. The counter reaction to it has also happened. Therefore, we see a definite situation where a 9 am start of trade is going to happen now…(continue reading)

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