RBI sets up Working Group to review trading, settlement timings of financial markets

New Delhi: The Reserve Bank of India (RBI) on Friday set up a 9-member Working Group to undertake a comprehensive review of trading and settlement timing of financial markets.

The RBI pointed out that over the last few years, there have been several developments 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 availability of payment systems on a 24X7 basis.

Synchronised and complimentary market and settlement timings across various financial market segments can facilitate benefits of efficient price discovery and optimisation of the liquidity requirements, according to the RBI’s statement.

The working group has representation from various stakeholders and is expected to submit its report by April 30 this year.

The Working Group is headed by Radha Shyam Ratho, Executive Director, Reserve Bank of India as Chairperson and has eight other members. These include Ravi Ranjan, Deputy Managing Director, State Bank of India, Lalit Tyagi, Executive Director, Bank of Baroda, Ashish Parthasarthy, Group Head – Treasury, HDFC Bank, Parul Mittal Sinha, Head of financial markets, Standard Chartered Bank, Ashwani Sindhwani, CEO, Foreign Exchange Dealers’ Association of India (FEDAI).

The other members are Ravindranath Gandrakota, CEO, Fixed Income Money Market and Derivatives Association of India (FIMMDA), Shailendra Jhingan, Chairperson, Primary Dealers’ Association of India (PDAI), Dimple Bhandia, Chief General Manager, Financial Markets Regulation Department, Reserve Bank of India (Member Secretary).

The terms of reference (ToR) for the Working Group are: Review the current trading and settlement timings for various financial markets regulated by the Reserve Bank including functioning hours of market infrastructures for trading, clearing, settlement and reporting of transactions.

Identify the frictions, challenges and issues, if any, in overall functioning of markets on account of current trading and settlement timings in terms of transmission of prices/rates across markets, volatility and distribution of trades, liquidity requirements, netting efficiency, etc.

Examine cross-country practices relating to market timings and their influence, if any, on market development in terms of participation, liquidity and volumes.

Also, examine the implications, including benefits, costs and challenges, if any, in revising the current timings for trading and settlement and to make recommendations on trading and settlement timings.

The Working Group may invite other stakeholders for consultation, as deemed necessary.

–IANS