RBI panel to review trading, settlement timings across various market segments

Reserve Bank of India's new Governor, Sanjay Malhotra, announced on Friday that the RBI will set up a panel to conduct a comprehensive review of trading and settlement timings for markets regulated by the central bank.

At the end of the three-day meeting of the Monetary Policy Committee (MPC), Malhotra stated that a working group, with representation from various stakeholders, will be formed to carry out the review in light of recent developments in financial markets and market infrastructure.
The panel will submit its report by April 30th of this year.


The RBI acts as a regulator for both the money market and the forex market.

"Synchronized and complementary market and settlement timings across various financial market segments can facilitate efficient price discovery and optimize liquidity requirements," the RBI said.

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Over the last few years, there have been several developments, including increased electronification of trading, the availability of forex and certain interest rate derivative markets on a 24x5 basis, increased participation of non-residents in domestic financial markets, and the availability of payment systems on a 24x7 basis, it said.

The RBI also announced that it would now include forward contracts in government securities to help long-term investors, such as insurance funds, manage their interest rate risk across interest rate cycles.

"They will also enable efficient pricing of derivatives that use bonds as underlying instruments. Draft directions in this regard were issued in December 2023. The final directions, taking into account public feedback, will be issued shortly," the regulator said.