The Reserve Bank of India (RBI) has formed a nine-member Working Group to conduct a comprehensive review of trading and settlement timings in financial markets.
The RBI highlighted that, over the past few years, several developments have taken place, including increased electronification of trading, availability of Forex and certain interest rate derivative markets on a 24X5 basis, increased participation of non-residents in domestic financial markets, and the availability of payment systems on a 24X7 basis.
According to the RBI, synchronized and complementary market and settlement timings across various financial market segments can facilitate efficient price discovery and optimize liquidity requirements.
The Working Group, which includes representatives from various stakeholders, is expected to submit its report by April 30 this year.
Chaired by Radha Shyam Ratho, Executive Director of the Reserve Bank of India, the group includes eight other members: Ravi Ranjan, Deputy Managing Director of State Bank of India; Lalit Tyagi, Executive Director of Bank of Baroda; Ashish Parthasarthy, Group Head – 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 of the Financial Markets Regulation Department at the Reserve Bank of India (Member Secretary).
The terms of reference (ToR) for the Working Group include reviewing the current trading and settlement timings for various financial markets regulated by the RBI, including the functioning hours of market infrastructures for trading, clearing, settlement, and reporting of transactions. The group will identify any frictions, challenges, and issues in the overall functioning of markets due to current trading and settlement timings, such as transmission of prices/rates across markets, volatility, distribution of trades, liquidity requirements, and netting efficiency. Additionally, the group will examine cross-country practices relating to market timings and their influence on market development in terms of participation, liquidity, and volumes. The Working Group will also assess the implications, benefits, costs, and challenges of revising the current timings for trading and settlement, and make recommendations accordingly.
The Working Group may invite other stakeholders for consultation as deemed necessary.
