Extended market timing: Viral Acharya says RBI will set up panel

With the demand for extending the market timings for a segments like currency futures and over- the-counter forex markets gaining currency, the Reserve Bank today said it will set up a committee to review the same. Deputy governor Viral Acharya today said with increased global integration of the domestic markets, it is increasingly being discussed that market timings may be reviewed to facilitate better and quicker pricing of global developments.

"It has been proposed to set up an internal working group that will comprehensively review the timings of various markets that are under the purview of the RBI, and assess the necessary payment and settlement infrastructure that can support a co-ordinated timings across these markets," Acharya told reporters during the post-policy presser.
The proposed group will submit its report by the end of October, he added.

He further said any changes to market timings have to be in sync with clearing and settlement arrangements and their efficiency.

"While the decision of market timings is best left to market participants and exchanges/trading platforms, it is necessary that timings across products and funding markets complement each other and avoid unanticipated frictions," the deputy governor said.

Acharya further said RBI has also proposed to review various forex derivative facilities for residents. "The move is meant to reduce administrative and documentation requirements and make the present set of regulations more principles-based so as to incentivise hedging while disincentivising what might look at hedging transactions but are not," he said, adding the draft circular on the revised guidelines will be released for public comments by the end of September.

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The Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations of 2000, commonly known as Fema 25, lays down the broad rules regarding forex derivative contracts that can be traded in the country and access to such products by residents.