The Debate on 24/7 Derivatives Trading Market in India: Pros and Cons

The 24/7 Derivatives Market Debate: Can India Keep Pace Without Losing Its Footing?

When the markets took a sharp tumble on April 7, one question quickly resurfaced: Should India move to round-the-clock derivatives trading? In an age where global headlines never sleep, many believe the answer is yes. But as with anything involving the markets, the reality is far more layered.

At the heart of the conversation are two competing truths. On one hand, the modern investor operates in a 24/7 news cycle. Delayed access to markets can mean missed opportunities—or worse, unmanaged risk. On the other, longer trading hours may do little to help the average trader and could stretch the system beyond what it's built for today.

SEBI’s 2018 Framework: Open Door, But With Conditions

Back in 2018, SEBI opened the door for exchanges to propose extended trading hours in equity derivatives—potentially all the way from 9:00 AM to 11:55 PM. But that green light came with strings attached. Exchanges were expected to submit detailed implementation plans covering everything from surveillance and settlement to risk management and operational readiness.

The National Stock Exchange (NSE) took a crack at it, suggesting a gradual extension—first till 9 PM, and eventually to 11:30 PM. But the plan didn’t move forward. Why? Because the wider ecosystem—including brokers, clearing corporations, and IT infrastructure providers—wasn’t aligned. Without consensus, the idea stalled.

The Case for Going 24/7: Risk Management in a Sleepless World

For proponents of extended trading, the logic is straightforward. Markets today are shaped not just by local data or quarterly earnings, but by war in Europe, oil prices in the Middle East, or policy shifts in Washington. Indian investors often wake up to price gaps caused by overnight developments in other parts of the world.

Tejas Khoday, CEO and co-founder of FYERS, believes a 24/7 market would allow investors—particularly institutional ones—to manage risk dynamically. “If you can't access the market when global events unfold, you're left exposed,” he says. "Round-the-clock trading would bring India closer to international norms."

Claimed Benefits

Real-time response to global events: No more waiting till morning to adjust positions.
Better risk management: Especially for those managing large or leveraged portfolios.
Deeper institutional participation: More flexibility could encourage capital deployment by sophisticated investors.

The Cautionary Voices: Speculation, Cost, and a Lack of Liquidity

But not everyone is convinced. Rajesh K, Director at Alice Blue, argues that the real problem isn’t trading hours—it’s trading habits. "Retail traders in India are largely intraday-focused," he says. "They rarely hold overnight positions, so extended hours won't do much for their risk management." In his view, education, diversification, and disciplined hedging should take precedence over simply staying open longer.

Beyond investor behaviour, there are operational questions. Running a market through the night isn’t just a flick of a switch. It requires systems, staff, compliance, and—crucially—liquidity.

Key Concerns

Higher costs: Brokers would need to invest in staff and tech to operate longer.
Wider bid-ask spreads: Thin liquidity during off-hours could make trading inefficient.
Low initial participation: Without enough volume, the market might limp along during extended hours, failing to offer real utility.

What About GIFT City?

Some suggest India already has a shadow version of extended trading via GIFT Nifty, which allows access during international hours. But as Mayank Bansal, an options trader at a hedge fund, points out, this solution isn’t available to everyone.

While FPIs and NRIs can participate, domestic retail investors are restricted by RBI rules under the Liberalised Remittance Scheme (LRS). And even for eligible investors, trading activity in GIFT Nifty remains relatively thin. “If the volume isn’t there, it doesn’t help with price discovery or risk transfer,” Bansal adds.

SEBI’s Current View: Open-Minded, But Not in a Hurry

SEBI hasn’t ruled anything out. Its 2018 circular still stands. But the regulator has made it clear: no change will be approved unless there is broad agreement across all stakeholders, including brokers, exchanges, and clearing corporations.

Any proposal must include:

A solid risk management framework
Detailed plans for clearing and settlement
Continuous position monitoring and surveillance
Assurance that systems and staff are ready for the load

Final Thoughts: Not Just a Market Decision, But a Cultural One

India’s derivatives market is among the most active in the world. But expanding it into the night is not just a technical challenge—it’s a cultural one.

Retail traders would need to rethink how and when they trade. Institutions would need the infrastructure to support overnight operations. Regulators would need to ensure fairness and stability in a more complex landscape.

A full 24/7 market may be a logical next step in a globalised economy, but it cannot come at the cost of investor protection, market integrity, or operational resilience.

A phased approach—starting with modest extensions and supported by robust systems and clear communication—might be the only way forward. One thing is clear: this isn’t just about staying open longer. It’s about ensuring that when the lights do stay on, the market still works—for everyone.