MUMBAI, July 15: The Bombay Stock Exchange (BSE) has done away with the practice of conducting a daily opening session before the commencement of trading.

The opening session, which lasts for half an hour, is carried out at most of the exchanges to absorb the developments of the previous day and thereby stabilise price movements before trading commences.

BSE authorities have done away with this practice as they feel that the circumstances leading to the introduction of such a system no longer exist. The trading session on the BSE has therefore been rescheduled with effect from July 14. Trading on the exchange will be carried out between 10 a.m. and 3.30 p.m., with no scope for the pre-opening session.

"The pre-opening session served the purpose of providing scope for the absorption of sensitive news emerging from the corporate sector after the trading hours," said RC Mathur, executive director, BSE. Market participants have time and again pointed out the fact that in the light of the Sebi diktat, whereby starting June 1, all negotiated deals have to necessarily emerge into delivery-based purchases, the pre-opening session has lost its charm. BSE officials, too, have accepted the fact that the pre-opening session recorded not more than two to three trades on an average.

Inspite of the steps taken to curb unofficial deals commonly known as kerb deals, the market has been absorbing a larger portion of these deals into the main stream, which eventually take place at the pre-opening session itself.

In fact, BSE's initiative to do away with the practice serves the purpose of avoiding the possibility of diverting an off-market deal into the official channel. This, according to the exchange authorities, would provide a better feel of the market perception. However, some brokers maintain that the pre-opening session was a determining factor of the day's market moods.

The National Stock Exchange (NSE) still continues with the practice of a pre-opening session. NSE's NEAT (online system of NSE) computes the weighted average price based on the buy or sell feeds fed into the main system during the pre-opening session as compared with the previous day's closing prices.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.