Latest News | RBI Panel Recommends Retaining Current Trading Hours for Forex Markets
Get latest articles and stories on Latest News at LatestLY. An RBI-appointed panel has recommended retaining the current trading hours for the foreign exchange markets and extending the call money market timings to 7 pm.
Mumbai, May 2 (PTI) An RBI-appointed panel has recommended retaining the current trading hours for the foreign exchange markets and extending the call money market timings to 7 pm.
The currency markets are essentially hedging markets which are open for trading from 9 am till 3:30 pm with after-market hours trading permitted, effectively making them 24x5 (Monday-Friday) markets.
Market trading timing for call/notice/term money is 9 am to 5 pm, while for repo in government securities it is 9 am to 2.30 pm.
"Retain the current market hours for the foreign exchange markets (OTC and exchange-traded)," said the report of the Working Group to undertake a comprehensive review of trading and settlement timings of markets regulated by the Reserve Bank.
It has also suggested to maintain the settlement mechanism of a single guaranteed settlement of OTC foreign exchange transactions by CCIL each day.
The panel has suggested extending the call money market timings to 7 pm. Concomitantly, the reporting window for NDS-Call transactions, including for cancellations, should also be extended to 7:30 PM.
It has also suggested to unify and extend the timings of market repo and TREP trading hours till 4 pm.
The panel has submitted its report, and the RBI on Friday placed the same on its website for comments from stakeholders.
The recommendations are aimed at facilitating further market development, price discovery and optimisation of liquidity requirements.
With regard to the market hours for the government securities market, the group has recommended that the current timings (9 am to 5 pm) be continued with.
However, post onshore market hours, transactions in government securities with non-residents could be permitted during a time window between 5 pm and 11:30 pm.
It has also recommended that such transactions, if permitted, be reported to NDS-OM on T+1 day before onshore market hours and settled on a T+2 basis.
The market timings in the financial markets regulated by the Reserve Bank include the money market, government securities market, foreign exchange market and markets for interest rate.
The last comprehensive review of market timings for financial markets regulated by the Reserve Bank was undertaken in 2019.
Over the last few years, there have been significant developments in the financial markets. For instance, the size of different domestic markets has increased significantly and the number of participants in different markets has also increased as has the diversity of products.
Non-residents' participation in Indian derivative markets has increased pursuant to regulatory changes facilitating such participation while such participation has also increased in the government securities market post inclusion of government securities in global bond indices.
The panel noted the need for a periodic review of market trading and settlement timings to ensure that they remained relevant given the evolving market microstructure.
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