The National Stock Exchange of India’s (NSE) proposal to add a trading session for index options and futures from 6 pm to 9 pm has implications for brokers, involving both potential incremental revenue and rising costs. Here’s a breakdown of the key points:
- Incremental Revenue Opportunities:
- The extended trading session is seen as an opportunity for brokers to generate additional revenue by facilitating trading during the proposed hours.
- Rising Costs for Brokers:
- Implementing the proposed session may require brokers to hire additional employees to handle operations during the extended hours.
- Broking firms, including large ones like HDFC Securities, anticipate the need to add 20-30 more people at their centralised desks to manage evening operations.
- Headcount and Salaries:
- The need for additional headcount will result in increased salary expenses for brokers.
- Small brokers may also need to allocate resources for tasks such as account opening, tech support, and customer service during the extended hours.
- Operational Challenges:
- Managing operations during the extended session will require brokers to have the necessary infrastructure and support systems in place to address client needs efficiently.
- Commodity Trading Implications:
- Brokers that also engage in live commodity trading on the Multi Commodity Exchange (MCX) until 11:30 pm will face additional challenges and resource requirements.
- Investment in Technology:
- Brokers may need to invest in technology to ensure seamless operations and to handle increased trading volumes during the extended hours.
- Client Support:
- Providing adequate customer support during the extended hours will be crucial for brokers to maintain a positive client experience.
The decision for brokers to adapt to the extended trading hours will involve weighing the potential benefits of increased revenue against the additional costs and operational complexities. It also highlights the need for a strategic approach to technology, staffing, and client service to effectively navigate the challenges associated with the proposed trading session extension.
