On Table: Uniform hours for all markets

Mumbai: The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) are exploring the possibility of synchronising trading time for all markets - stocks, bonds, currency and commodities, two people with knowledge of the matter said.

The aim is to ensure ease of operations for investors betting across asset classes as well as for the back-end staff at intermediaries, they said.

"The central bank has started working on a plan," one of the people told ET. "Inter-regulatory discussions are now examining the feasibility of such a proposal."


The RBI has sought comment from market participants on the proposal, the people said. The RBI and Sebi did not comment.

The central bank, meanwhile, is in the process of restoring pre-pandemic market hours.

'Uniform Cut-off Time Helps'
Last Friday, the RBI announced that financial markets including bonds, rupee, interbank call money and tripartite repo would open at 9 am from April 18, an hour earlier than now. However, closing would continue to be at 3.30 pm - it was 5 pm before the pandemic.

In the equity market, the pre-open session starts at 9 am, while regular trading happens from 9.15 am to 3.30 pm.

In the sovereign bond market, most of the trades typically happen in the first half of the trading session. If it closes early in line with the equity market timing, volumes are unlikely to be affected.

"Eventually somewhere it has to converge, then only markets will be developed," said A Balasubramanian, CEO of Aditya Birla Mutual Fund. "If you want more bonds to be traded in the exchange platforms, a uniform cut-off time for trades helps."

In the equity market, settlements take about two days to complete, under what is known as T+2. For government bonds, it is T+1. Corporate bond trading is also typically settled T+1, though some may show T+0 or T+2.

While government bonds are cleared and settled through Clearing Corporation of India, in the case of corporate bonds, it is NSE Clearing and Indian Clearing Corporation Ltd, which are offshoots of stock exchanges NSE and BSE. Custodian banks are also a quintessential part of the whole ecosystem.

"Uniformity in settlement processes and timings, across different asset classes such as equities, government bonds, corporate bonds, etc., can help investors," said Sriram Krishnan, managing director - global transaction banking at Deutsche Bank.

Payments against transactions too could become more streamlined.

The pay-in of funds (when securities are transferred to the custodian or broker after an investor sells them) and pay-out (when the buyer receives the securities) take place at different time slots for different asset classes. For example, pay-out for equities takes place at around 1 pm whereas for government bonds, it happens after 5 pm.