Forex market may see longer trading hours

Mumbai: Mumbai: Some financial markets regulated by RBI, including foreign exchange, may operate for longer hours as RBI has set up a panel to review trading timings.

"Over the last 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, greater participation of non-residents in domestic financial markets, and 24x7 payment systems," said RBI governor Sanjay Malhotra.

Trading hours vary across financial markets. Call, notice, and term money, commercial paper, certificates of deposit, corporate bond repo, govt securities, and rupee interest rate derivatives trade from 9 am to 5 pm. Market repo in govt securities closes at 2:30 pm, tri-party repo at 3 pm, and forex trades, including derivatives, at 3:30 pm.

RBI has formed a Working Group led by Radha Shyam Ratho, executive director at RBI, to review financial market trading and settlement timings. The group includes senior representatives from banks, FEDAI, FIMMDA, and PDAI. Dimple Bhandia, chief general manager at RBI’s Financial Markets Regulation Department, will serve as member secretary. The group will assess market operations and propose recommendations.

The group will review current trading and settlement hours for financial markets regulated by RBI, including market infrastructure functioning. It will identify frictions and challenges in price transmission, volatility, liquidity, and netting efficiency. It will also examine global practices on market timings and their impact on participation, liquidity, and volume. The panel will evaluate potential benefits, costs, and challenges of changing trading hours before making recommendations.