RBI’s Draft Suggests Change In Forex Market Timings, Money Market Hours
The Reserve Bank of India’s draft report suggested changes in the timings of the foreign exchange market and call money market. It, however, has not made any recommendation to change trading hours of government securities.
In its draft report ‘Comprehensive Review of Market Timings’ by the Internal Working Group, the central bank suggested new timings for the foreign exchange market from 9 a.m. to 9 p.m. Trading in the market is currently allowed till 5 p.m.
With respect to money markets, the draft suggested extension of real-time gross settlement system customer window and the call market timings by an hour. The new suggested timings are from 9 a.m. to 6 p.m.
The RBI’s draft policy said that the extension in foreign exchange market timing would complement the policy measures aimed towards improving access to onshore markets and will better position onshore markets vis-à-vis offshore markets in terms of efficiency, liquidity and price discovery for non-residents.
The draft said that such an extension will improve the domestic market liquidity in the medium- to long-term period by enabling the shift of some offshore volumes to onshore markets. The trading hours should be extended for over-the-counter and for the exchanges, it said.
Other Recommendations :
- It also recommended a change in its settlement time of primary open market operations from noon to 4 p.m. to reduce intra-day liquidity requirement.
- Cut-off time for commercial papers and certificate of deposits secondary market trading to be fixed at 5 p.m.
- The current market timings for the government-securities markets may be retained, on account of lack of demand from participants, the RBI said.