Open till 7pm? RBI panel calls for extending money market hours

MUMBAI: With UPI and different digital rails retaining money in movement round the clock – and India’s markets changing into extra entwined with world ones – an RBI panel has proposed extending money market hours to 7pm from 5pm. The shift would give banks better flexibility in managing short-term liquidity and accessing interbank and central financial institution funds.
The suggestions come from a working group set as much as evaluate buying and selling and settlement hours throughout RBI-regulated markets. The panel argued that buying and selling hours form how effectively markets perform, affecting liquidity, volatility, and value discovery. Since the final main evaluate in 2019, India’s monetary markets expanded in dimension and complexity, with extra contributors, a broader vary of merchandise, and elevated non-resident activity-especially in govt securities and derivatives following regulatory and index modifications.Tighter hyperlinks between onshore and offshore markets, advances in buying and selling infrastructure, and round the clock cost techniques altered liquidity dynamics, prompting the necessity to revisit market timings, the panel mentioned.
In money markets, the panel proposed extending name money buying and selling to 7pm, with the reporting window for such transactions to shut at 7:30pm. It additionally beneficial that market repo and triparty repo (TREP) commerce till 4pm, an hour later than the present shut. In line with the buying and selling extension, the settlement window for repo offers would shift to five:30-6:30pm.
To align market operations at first of the day, the panel advised transferring ahead the liquidity adjustment facility (LAF) public sale to 9.30-10am. Fine-tuning operations would proceed on the central financial institution’s discretion all through the day.