RBI Establishes Working Group to Assess Financial Market Trading and Settlement Timings
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Synopsis
The Reserve Bank of India has formed a 9-member Working Group to review trading and settlement timings in financial markets, aiming to enhance efficiency and market functioning. The group will submit its report by April 30, 2023.
Key Takeaways
- Formation of a 9-member Working Group by RBI.
- Review of trading and settlement timings in financial markets.
- Focus on synchronized market timings for efficiency.
- Members represent various financial institutions and associations.
- Report expected by April 30, 2023.
New Delhi, Feb 7 (NationPress) The Reserve Bank of India (RBI) has recently formed a 9-member Working Group tasked with conducting a thorough review of the trading and settlement timings within the financial markets.
The RBI has noted that in recent years, numerous developments have emerged, including the enhanced electronification of trading, the availability of Forex and specific interest rate derivative markets operating on a 24X5 basis, a rise in non-resident participation in domestic financial markets, and payment systems accessible on a 24X7 basis.
According to the RBI's announcement, synchronized and complementary market and settlement timings across different segments of financial markets can lead to improved price discovery and optimized liquidity management.
This Working Group includes representatives from various stakeholders and is expected to deliver its findings by April 30 of this year.
Chairing the Working Group is Radha Shyam Ratho, Executive Director of the Reserve Bank of India, along with eight other members. Notable members include Ravi Ranjan, Deputy Managing Director at the State Bank of India, Lalit Tyagi, Executive Director at Bank of Baroda, Ashish Parthasarthy, Group Head - Treasury at HDFC Bank, Parul Mittal Sinha, Head of Financial Markets at Standard Chartered Bank, and Ashwani Sindhwani, CEO of the Foreign Exchange Dealers’ Association of India (FEDAI).
Other members consist of 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, Financial Markets Regulation Department at the Reserve Bank of India (serving as Member Secretary).
The terms of reference (ToR) for this Working Group include: reviewing the existing trading and settlement timings for the various financial markets governed by the RBI, including the operational hours of trading, clearing, settlement, and transaction reporting infrastructures.
They will also identify any frictions, challenges, and issues related to the current timings that may affect market functioning, such as price transmission, volatility, trade distribution, liquidity needs, and netting efficiency.
The group will analyze international practices regarding market timings and their potential impact on market development, including participation rates, liquidity, and trading volumes.
Additionally, they will evaluate the implications—benefits, costs, and challenges—of potentially adjusting the current trading and settlement timings and provide recommendations accordingly.
The Working Group may consult other stakeholders as necessary.
