The Reserve Bank of India (RBI) on Friday established a 9-member Working Group to conduct a comprehensive review of the trading and settlement timings for financial markets.
The group will examine various developments in the financial sector over recent years, including the increased electronification of trading, the availability of Forex and certain interest rate derivative markets operating on a 24×5 basis, the growing participation of non-residents in domestic financial markets, and the round-the-clock availability of payment systems.
In its statement, the RBI emphasized that synchronizing and harmonizing market and settlement timings across different segments of financial markets could lead to more efficient price discovery and better optimization of liquidity requirements. This move aims to improve the overall functioning of financial markets in India.
The Working Group will be chaired by Radha Shyam Ratho, Executive Director at the Reserve Bank of India, and will include eight other members. The members come from various sectors within the financial industry, including Ravi Ranjan, Deputy Managing Director at State Bank of India; Lalit Tyagi, Executive Director at Bank of Baroda; Ashish Parthasarthy, Group Head of Treasury at HDFC Bank; Parul Mittal Sinha, Head of Financial Markets at Standard Chartered Bank; Ashwani Sindhwani, CEO of the Foreign Exchange Dealers’ Association of India (FEDAI); Ravindranath Gandrakota, CEO of the Fixed Income Money Market and Derivatives Association of India (FIMMDA); Shailendra Jhingan, Chairperson of the Primary Dealers’ Association of India (PDAI); and Dimple Bhandia, Chief General Manager at the RBI’s Financial Markets Regulation Department, who will serve as the Member Secretary.
The Working Group’s primary objective is to review the current trading and settlement timings for various financial markets regulated by the RBI. This includes the functioning hours of market infrastructures for trading, clearing, settlement, and transaction reporting. Additionally, the group will analyze any challenges or frictions arising from the current timings, such as their impact on price/rate transmission across markets, market volatility, trade distribution, liquidity requirements, and netting efficiency. The group will also examine international practices regarding market timings and assess their impact on market development, including participation, liquidity, and trading volumes.
Another key focus will be to evaluate the potential implications, including the benefits, costs, and challenges, of revising the current timings. The Working Group will provide recommendations based on their findings.
To ensure comprehensive analysis, the Working Group may invite additional stakeholders for consultations as needed. The group is expected to submit its report by April 30, 2025.
-IANS
