RBI releases draft report on Comprehensive Review of Market Timings
New Delhi, July 11 (KNN) The Reserve Bank of India (RBI) Internal Working Group has released its draft report on Comprehensive Review of Market Timings, suggesting that over-the counter (OTC) forex and exchange traded currency derivatives market hours be extended from 9 am to 9 pm from the current 9 am to 5 pm window.
The draft of the report said “While the extension of market timings is expected to provide benefits such as better pricing of post market hours information/data, improved onshore price discovery, and possible shift of offshore volumes to onshore, there is a view that it may entail higher costs to stakeholders.”
However, since RBI is in the process of reviewing and rationalizing foreign exchange regulations to provide flexibility in terms of choice of products, participation, positions, etc., both for residents and non-residents, extension of market hours would complement these policy measures. Thus, calibrated extension of market hours, and to begin with revised market timings of 9am-9 pm, may be considered to gauge demand and potential benefits, it added.
An internal working group was set up by RBI last year to study the current timings of various financial markets regulated by the Reserve Bank, including instruments traded on exchanges; examine the implications, including benefits and costs, of revision in current timings for trading as well as for supporting payment and settlement arrangements; and, make recommendations in respect of timings for trading, clearing and settlement arrangements as well as for any related aspect of market functioning.
The committee recommended that the timings for both inter-bank and client segments may be extended and the current gap of 30 minutes between inter-bank and client segments may be maintained to allow banks to manage their risks.
With extension in RTGS customer window till 6:00 pm, the timings for collateralized money market segments (market repo and TREPS) may be extended till 4:00 pm, the draft suggested.
To streamline benchmark rate calculation, cut-off time for Commercial Paper (CP) and Certificate of Deposits (CD) secondary market trading should be fixed at 5:00 pm, thereby aligning it with other segments, Working Group recommended.
The RBI has invited comments from market participants and other interested parties on the draft report latest by July 31, 2019.