An internal committee of the Reserve Bank of India, which was set up to review timings of different financial markets, suggested that the foreign exchange market could function from 9 am to 9 pm At present, the currency market works from 9 am to 5 pm. It change the timing of the functioning of the foreign exchange market from 9 am to 9 pm. Currently, the currency market works from 9 am to 5 pm. The move is after RBI’s consideration to gauge demand and potential benefits. RBI also said that if there is lack of demand from participants, the current market timings for government security markets may be retained.
“Calibrated extension of market hours, and to begin with, revised market timings of 9 am — 9 pm, may be considered to gauge demand and potential benefits,” the draft report of the committee said.
The report noted that there are mixed views on the benefits of extension of market timing.
“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 a possible shift of offshore volumes to onshore, there is a view that it may entail higher costs to stakeholders,” it said.
Since the central bank is in the process of reviewing and rationalising foreign exchange regulations to provide flexibility regarding products, participation and positions, both for residents and non-residents, extension of market hours would complement these policy measures, the draft said.
The panel suggested call money market timings could be extended till 6 pm instead of the 5 pm now, to facilitate liquidity management by banks.
The current market timings for government security markets may be retained, the draft said, on account of lack of demand from participants.
Objective:
The move is after RBI’s consideration to gauge demand and potential benefits. This extension of market timings is expected to provide various benefits like better pricing of post market hours information/data, improved onshore price discovery and a possible shift of offshore volumes to onshore. It is also understood that the extension might entail higher costs to stakeholders.
RBI to rationalise Forex regulations:
RBI also plans to review and rationalise foreign exchange (Forex) regulations. It aims to provide flexibility regarding products, participation and positions, both for residents and non-residents, extension of market hours would complement these policy measures.
The panel suggested call money market timings could be extended till 6 pm instead of the 5 pm now, to facilitate liquidity management by banks.
