RBI wants to extend forex trading timings to bring more global players

• The Reserve Bank of India (RBI) is proposing to increase timings for forex trade.
  
• Currently the over-the-counter forex exchange-traded currency derivatives market functions till 5 pm.
  
• The special committee wants it extended it to 9 pm.
  
  

The Reserve Bank of India (RBI) is proposing to increase timings for forex trade to bring in more overseas participants. If timings are extended, Indian trade markets will be able to sync better with their global counterparts.

Currently the over-the-counter forex exchange-traded currency derivatives market functions till 5 pm. The special committee wants it extended it to 9 pm.

The proposal was floated after an internal committee meeting of the Central Bank recommended the revision for currency markets and that of short-term loans.

More participants

If accepted, this move can increase trading volumes by drawing more overseas participants.

“Gradual integration of the Indian economy with the global economy and increased interest of foreign investors in Indian markets aided by a liquid USD/INR forex market have led to growing volumes in rupee trades in the offshore markets,” the committee mentioned in the RBI draft report.

The report also said that volumes in the offshore currency markets have steadily increased as compared to the onshore exchanges, during last 3-4 years.

The market share of domestic exchanges in the US dollar and Rupee futures have come down to 56% in 2018-19, from 74% in 2014-15.

The RBI also proposed to stretch the inter-bank call money market from 5 pm to 6 pm. Presently, money market trading hours start at 9 am.

“The group has recommended the extension of timings for both collateralized and uncollateralised segments of the money market,” the committee said.

Extension of an hour in the timings for repo market is also expected from the current 2:30 pm.

The committee also recommended shifting settlement timings for primary auction or Open Market Operation from presently at noon to around 4 pm.