RBI IWG recommends extension of OTC forex, exchange traded currency derivatives market hours

New Delhi: The 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.

“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  rationalising 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,” the RBI draft said.

Here is the revised forex market timings as recommended by the IWG in its draft

An internal working group was set up last year to study the current timings of various financial markets regulated by the Reserve Bank, including instruments traded on exchanges.

The working group was tasked to 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 IWG also recommended that the call market timings may be extended till at 6 pm co-terminus with RTGS customer window, by which time high value payments are expected to get over. “Banks may  manage  unanticipated  their liquidity,  post  6 pm, by accessing RBI’s MSF window or reverse repo facility,” it said.