RBI Initiates Comprehensive Review of Financial Market Timings

In a major move to enhance market efficiency, the Reserve Bank of India (RBI) has set up a nine-member Working Group to review the trading and settlement timings across various regulated financial markets. This decision comes in response to evolving market conditions, increased digitalization, and the need to align Indian market operations with global standards. The group is expected to submit its report by April 30, 2025.

Why is RBI Reviewing Market Timings Now?

The financial market structure in India has undergone significant transformation in recent years. Several factors have contributed to this shift, including:

• The expansion of electronic trading platforms, making transactions faster and more efficient.
• The rise of 24×5 trading in Forex markets and certain interest rate derivative markets.
• Increased participation of foreign investors in Indian markets.
• The round-the-clock availability of payment systems.

With these developments, the current trading and settlement timings may need adjustments to ensure smoother transactions, better price discovery, and reduced liquidity constraints. The RBI’s latest initiative aims to address these challenges by optimizing market timings for better efficiency.

Who Are the Members of the RBI Working Group?

The Working Group is chaired by Radha Shyam Ratho, Executive Director at the RBI. Other key members include:

Ravi Ranjan, Deputy Managing Director, State Bank of India

Lalit Tyagi, Executive Director, Bank of Baroda

Ashish Parthasarthy, Group Head of Treasury, HDFC Bank

Parul Mittal Sinha, Head of Financial Markets, Standard Chartered Bank

Ashwani Sindhwani, CEO, Foreign Exchange Dealers’ Association of India (FEDAI)

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, RBI (Member Secretary)

This panel includes representatives from commercial banks, financial associations, and regulatory bodies, ensuring a well-rounded approach to the review process.

What Will the Working Group Focus On?

The RBI has tasked the Working Group with several objectives to make market operations more efficient:

Assessing current trading hours across all regulated financial markets, including banking, forex, and securities.

Identifying potential challenges caused by existing timings, such as liquidity mismatches, volatility, and inefficiencies in price transmission.

Studying international benchmarks to compare how market timings function in other major economies and how they impact market depth and participation.

Evaluating possible changes and their implications, including operational costs and benefits for different stakeholders.

Providing recommendations to align market operations with best practices, ensuring greater transparency and stability.

What’s the Historical Context of This Review?

This is not the first time the RBI has initiated a study on market timings. In August 2018, the central bank formed an internal group to assess market hours across various segments. The group’s report, released in July 2019, offered recommendations on improving trading structures and settlement cycles. However, with the post-pandemic market shift, increased foreign participation, and faster settlement systems, the RBI sees the need for another review.

What’s Next for India’s Financial Markets?

The Working Group is expected to engage with various stakeholders, including banks, traders, market associations, and policymakers. Their final report, due by April 30, 2025, will provide an updated roadmap for financial market timings in India. If changes are implemented, they could impact trading hours across multiple segments, potentially benefiting investors, traders, and institutions with more synchronized operations.

Summary of the news