2/11/ · RBI Increases Market Trading Hours. The trading hours for various markets regulated by the Reserve Bank were amended effective from April 7, in view of the 3/4/ · Foreign Currency (FCY)/Indian Rupee (INR) Trades including Forex Derivatives* 9 AM to 5 PM: 10 AM to 2 PM: Rupee Interest Rate Derivatives* 9 AM to 5 PM: 10 AM to 2 PM *: 30/4/ · On April 3, the RBI first announced shortened market hours, from 10 AM to 2 PM, for the financial markets from April 7, to April 17, , which was further extended till April 30 17/4/ · So, from Monday, trading hours for these RBI regulated markets will be morning AM to evening PM. The central bank of India said that it has taken this decision after 25/2/ · Forex market hours are broken up into four major trading sessions: Sydney, Tokyo, London and New York. These are the largest trading centres, accounting for nearly 75% of FX ... read more
A comprehensive review of timings in the forex market is considered desirable for the reasons discussed here. Volumes in the offshore currency futures markets, have steadily increased during last years vis-à-vis on-shore exchanges Chart 3. Similarly, offshore markets for non-deliverable forward NDF in financial centres such as Singapore, Hong Kong, Dubai and London have seen sizable growth and, as per BIS Triennial Survey , NDF turnover stands at about USD 16 billion on a daily basis.
Offshore markets provide several advantages over onshore markets. The capital control regime requires that entities with Rupee exposure can access the onshore market for hedging. Even for hedgers, administratively, there is a natural incentive to operate in the offshore market so as to leverage their existing settlement as well as collateral arrangements through centralised treasuries.
Product related restrictions in the onshore market e. Offshore Rupee derivative market is virtually a 24 hour market and, therefore, non-residents have the flexibility to execute and unwind hedge contracts during their working hours. However, onshore market timings may not be a suitable window as per their time zone.
Thus, the ability to dynamically manage risk in the offshore market, makes NDF markets attractive for non-residents. Apart from this favourable tax laws may also be an important determinant in choice of trading market.
However, onshore hedging activities of non-residents have been low with forward outstanding currently at around USD 6 billion as compared to the investment at USD 80 billion. There is a possibility that non-residents prefer offshore markets to hedge their Rupee risk, because of centralised treasuries, ease of regulatory and taxation requirements, non-availability of onshore markets during their time zone, etc.
Trading hours of onshore forex markets, especially the exchanges, are shorter in comparison to offshore exchanges which offer Rupee contracts like DGCX, SGX, CME, ICE, etc. Table 3. These exchanges are located at major financial centres and offer a variety of products. Incidentally, although Rupee trades for hours on these exchanges, the majority of the volume per cent takes place during Indian trading hours Table 3.
These current timings overlap with the trading hours of Asian markets including their closing as well as first half of a European trading day. This allows Indian markets to have a reasonably good price discovery based on news in global markets during these hours. There are, however, some market hours, especially the US market opening after India closes and Asia opening before India opens , during which the Indian markets are shut, which have a bearing on the prices in Indian markets.
Further, domestic OTC markets in most economies have regulated market hours and a review of the spot market timings data for emerging Asian economies indicates that the trading hours vary in the range of hours Chart 3.
Indian forex markets remain open for 8 hours which is similar to most Asian markets. Even in case of major currencies G currencies which are traded 24 hours across the globe, domestic markets in each country are open for a limited time period and activity is transferred from one place to another.
As a corollary, any extension of domestic market hours might lead to higher volumes in off-shore exchanges. Onshore markets fail to capture major international events: Domestic markets are closed during important currency trading sessions such as New York time and Tokyo time. Hence, any major domestic or international event or data release during hours when the Indian markets are closed, are not priced in by the residents and this may impact the opening rates of the Rupee.
In extreme cases, it may manifest in a gap-up or gap-down at market opening, on the next day. While traders in offshore markets are able to price the information as and when it is released, an onshore trader is at a disadvantage. Commodity hedging market in India operates till This enables commodity hedging domestically, but the corresponding currency exposures remain unhedged as forex market is closed.
As seen in Chart 3. This is understandable as trades in DGCX price in information generated after NSE closes. Quick and effective assimilation of information is likely to make markets more efficient in terms of price discovery, reduction in volatility and impact cost. More significantly, there are substantially more days of high intra-day volatility than high overnight volatility. Roughly, 85 per cent of exchange rate volatility occurs during domestic market hours; perhaps even more because off-shore volatility is exaggerated due to relative illiquidity post Indian trading hours.
Offshore NDF markets impact on onshore price: Over a period, regulations have been liberalised to permit Rupee invoicing of trades, Rupee borrowings under the External Commercial Borrowings ECB route, issue of Masala Bonds, centralised hedging etc.
There is evidence that onshore exchange rate, especially in times of volatility, is guided by the price movements in offshore markets. A RBI working paper 4 on inter-linkages between onshore and offshore NDF markets shows that when Rupee is appreciating, there is a bi-directional relationship between the two markets, while there is a unidirectional impact of NDF market on onshore market when the Rupee is depreciating.
The results indicate that with increasing volumes of NDF market, the rupee is likely to become more prone to shocks emanating from overseas markets. The Group also carried out an empirical analysis to assess the impact of NDF closing prices on the forex opening prices in the domestic market for the period — Annex I.
The assessment indicated a strong bi-directional causality between NDF prices and onshore forex prices, which is statistically significant. The dynamic relationship between the NDF closing prices and domestic forex opening prices are also estimated through an unrestricted vector auto regression VAR. The estimated impulse response shows that a one standard deviation shock in NDF closing prices results in an increase of about 22 basis points in forex opening prices on the following day which gets muted after one day and peters out thereafter.
Extension of domestic market timings could help domestic markets to become less prone to external price fluctuations. However, for this to happen, along with extension of market hours, other complementary measures which are underway viz.
flexibility to non-residents to access onshore interest rate market and forex hedging markets, need to be expedited. a Globally, OTC forex markets in major currencies G10 currencies are open round the clock. The growing volumes in Rupee on offshore exchanges Chart 3. Further, internationally forex markets are quite active when New York and London times overlap, but the domestic Rupee market is closed during these hours.
Extension of trade timing could help in effective assimilation of international developments and help make the domestic markets less prone to the to external price fluctuations in Rupee. This would also imply effective exchange rate management policy.
b Prices would reflect significant developments during extended hours enabling domestic entities to manage risk more efficiently. a There could be less informed price discovery during extended hours due to lower liquidity and lower number of active market participants. b Efficient pricing in futures markets requires live spot market in the underlying. If the OTC market is closed, inefficient pricing and their illiquidity could lead to volatility, price overshoots and the associated costs.
c Keeping the spot market open would involve costs for participant banks, brokers etc. It may also require that the funding markets are kept open, further raising market costs. All these cost increases, since they are eventually passed on to customers, raise the cost of market access in the long run. a Though there will be initial costs, there are long term benefits in terms of market development.
Banks may minimise the cost through review of process flows, centralisation of activities, etc. Banks may decide to participate in extended trading hours based on their internal policy.
Further, with improved liquidity in the market over time, the costs may get reduced. Further, calibrated extension may help in limiting costs to some extent. a Any extension of trading hours could entail costs for various banks, brokers, custodians, regulators, etc. in terms of infrastructure, back office processing and human resource.
Not only Treasury Front Office, but various other supporting departments of banks e. There could be a need for keeping the branches open to process the documentation and related activities. The attendant costs could outweigh the benefits.
A similar analysis by Tokyo Stock Exchange TSE suggested that the early opening or extension of trading hours may have higher cost than benefits. Thus, TSE reduced the noon recess to allow additional trading time instead of extension of market timing. Annex III. The extent of additional cost due to extended business hours could not be quantified.
However, as per market feedback, extension may not have benefits commensurate with increase in costs, at least initially. Discussion with market participants indicate that market has a mixed view on the benefits of extension in market timing. While, the large corporates believe that extension in market timing may enable them to manage their risk efficiently, the smaller corporates appear to be indifferent to the same.
The feedback from banks, which are the major market makers, is also not unanimous. Some of them believe that extension in market timing need not impact volumes substantially and may lead to spreading of the volumes across extended hours.
Extension in market timing could entail higher infrastructure cost to stakeholders, viz. With, most of the turnover in offshore exchange traded rupee derivative market taking place during onshore market hours and limited market hours in most of the other emerging markets, suggests that any extension in market timings needs to be calibrated carefully.
As discussed in para 3. The current forex market regulations are being reviewed and rationalised to allow greater flexibilities to both residents and non-residents in terms of products choice, positions, purpose and participation etc.. Recently the Reserve Bank has also constituted a Task Force to examine the offshore Rupee market and recommend measures to incentivize the non-residents to hedge in the onshore market. It is felt that extension in market timing will complement these policy measures aimed towards improving access to onshore markets and better position onshore markets vis-à-vis offshore markets in terms of efficiency, liquidity and price discovery for non-residents.
This assumes importance as growth in the external sector and increased internationalisation of rupee, likely to increase trading interest and investor base in Rupee going forward. This is evident from introduction of Rupee products in several offshore exchanges. Extension of market timings may enable shift of some of the offshore volumes to onshore markets thereby improving domestic market liquidity, if not immediate but over medium to long term period. Experience from some of the exchanges viz.
Further, from the perspective of residents, the benefits could be in form of improved price discovery, reduction in volatility during opening hours, efficient hedging, etc. Better price discovery coupled with improved liquidity over a medium to long term horizon, may allow domestic market prices to become less prone to external price fluctuations in Rupee. It is therefore desirable to explore calibrated opening of markets to gauge demand and potential benefits. Markets segments to be extended: Clients generally prefer the OTC market for hedging their risks as it gives flexibility in terms of size and tenor of contracts.
The IWG examined the potential issues of extending the timing of exchanges only, leaving the OTC market unchanged. It is operationally easier to extend timings on exchanges as they already have some segments open in extended hours. However, longer market timings for currency futures over OTC spot market will create asymmetry between the underlying market and the futures market, which could possibly lead to higher volatility during the non-overlap timing. This is because in the absence of OTC spot markets, the price discovery in futures market could be purely based on the trading interests of entities dealing in extended hours.
Such prices therefore may not be a true reflection of the underlying interest. Similarly, while the future market would rapidly converge to the spot plus carry at the next spot open, when the spot market resumes its role as a price setter, it could still influence the opening on the next date.
Further, banks are active participants on both - exchange and OTC currency markets; they hedge their economic positions in both OTC options and forwards and exchange traded futures and options segments within the assigned limits. Extension of exchange timings without corresponding extension in the OTC market could subject overnight positions of banks to excess valuation changes.
Besides, the presence of customers, sensitive to volatile prices, would ensure that the banks stay active on exchanges also. Therefore, it is desirable to extend trading hours for both OTC and Exchanges. This would also be beneficial from the perspective of limiting infrastructural costs, human resource cost and administrative costs. IWG was of the opinion to extend the OTC forex and exchange traded currency derivatives markets till 9 pm.
This arrangement has worked well for banks. The IWG explored the feasibility of aligning inter-bank and customer window. Banks are of the view that the gap between inter-bank and customer window is needed to cover customer positions in the inter-bank market.
Banks will find it difficult to cover, in case there are large customer transactions at the closing moments of market. Further, this window allows banks to manage NOPL and regulatory requirements. Hence, banks are of the view that for efficient management of risks, inter-bank trading hours should be slightly greater than the customer timings. In several jurisdictions there is no gap between inter-bank and customer window.
There are no time restrictions for transactions in cross currencies. However, the market may still force banks to a uniform time-line as customers may shift to banks with larger trading window. The IWG suggests that the current structure of client and inter-bank timings - i. longer inter-bank timings by 30 minutes - may be continued as this window allows banks to manage their risks.
Timing of overnight money markets is provided in Table 3. For many other Asian economies, like Indonesia, Malaysia, South Korea and Hong Kong, interbank money markets are open till about 4 pm to pm local time , akin to that in India.
The cut-off timings for payment systems for customer transactions , in many of these jurisdictions, is before closure of money markets. However, in certain jurisdictions, including China, Thailand and Vietnam, retail payment systems remain open post closure of money markets. The committee reviewed the money market timings from the perspective of — 1 alignment of timings across various segments; 2 alignment of timing for members settling at RBI and members settling at DSBs; 3 intraday liquidity challenges due to sequencing of settlements; and 4 challenges for benchmark calculation.
It is desirable that the various segments of money markets remain open for a similar time window so that participants have options to access collateralised or uncollateralised funding as per their need. It may also alleviate pressure on any particular segment that remains open after closure of other market segments, which could happen in case of separate timings for different funding markets. However, different settlement mechanisms for collateralised market repo and TREPS segments and uncollateralised call segment pose challenges in alignment of timings.
The settlement of transactions in market repo and TREPS takes place along with secondary market transactions in securities segment. Multilateral netting of funds and securities results in high degree of netting benefits for market participants in terms of liquidity requirement. Further, sufficient time is also required after completion of securities settlement so as to facilitate market participants to repay their intra-day credit lines availed from banks.
Thus, availability of large value payment systems, such as RTGS, is essential for efficient functioning of the collateralised funding markets. Currently, funding markets in India remain open for about six to eight hours, which is comparatively on par with most emerging Asian economies. However, with the extension in customer RTGS timings till 6 pm and collateralised funding markets available till 3 pm, high value customer payments may entail liquidity management issues for banks.
Extension of RTGS customer window provides scope for extension of collateralised money markets. Taking into account the need for settlement in collateralised segment prior to closure of RTGS customer window, IWG suggests that market repo and TREPS may be extended till 4 pm. As call market transactions are settled bilaterally through RTGS, extension would not require any modifications in the supporting payment and settlement systems. Hence, IWG recommends that the call market timings may be extended till at 6 pm co-terminus with RTGS customer window , by which time high value payments are expected to get over.
In order to minimise risks arising due to the unprecedented situation created by the COVID outbreak, the RBI on April 3 trimmed the trading hours for various RBI regulated markets for four hours - between 10 am and 2 pm. The timings for currency market was revised from 10 am to 2 pm, while trading hours for debt market were revised to 11 am to 2 pm. Also Read: Interest rate paradox: No borrowers for cheap consumer loans -- MSMEs gasp for funds.
However, timing for stock market remains unchanged. Currently, Indian equity market trades from am to pm on weekdays. Sign In.
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In a release, the central bank said that the 'Alert List' is not exhaustive and is based on what was known to RBI at the time of issuing the release. It further cautions that an entity not appearing in the 'Alert List' should not be assumed to be authorised by the RBI. The RBI reiterates that resident persons can undertake forex transactions only with authorised persons and for permitted purposes, in terms of the FEMA.
While permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorised for the purpose by the RBI or on recognised stock exchanges viz. Resident persons undertaking forex transactions for purposes other than those permitted under the FEMA or on ETPs not authorised by the RBI shall render themselves liable for legal action under the FEMA. Here's the complete list of the 34 forex trading online platforms banned by RBI.
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25/2/ · Forex market hours are broken up into four major trading sessions: Sydney, Tokyo, London and New York. These are the largest trading centres, accounting for nearly 75% of FX 2/11/ · RBI Increases Market Trading Hours. The trading hours for various markets regulated by the Reserve Bank were amended effective from April 7, in view of the 11/9/ · RBI issues alert list: Declares these 34 forex trading online platforms as illegal Lead strategic initiatives in your organisation with IIM Kozhikode’s Advanced Strategic 3/4/ · Foreign Currency (FCY)/Indian Rupee (INR) Trades including Forex Derivatives* 9 AM to 5 PM: 10 AM to 2 PM: Rupee Interest Rate Derivatives* 9 AM to 5 PM: 10 AM to 2 PM *: 3/2/ · While permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorised for the purpose by the RBI or on recognised stock 17/4/ · So, from Monday, trading hours for these RBI regulated markets will be morning AM to evening PM. The central bank of India said that it has taken this decision after ... read more
The capital control regime requires that entities with Rupee exposure can access the onshore market for hedging. Extension of RTGS customer window provides scope for extension of collateralised money markets. The report has four annexes. During the settlement cycle, margins for outstanding positions are calculated. Settlement process, which currently gets over by pm currently, will be completed by around pm, post extension. The results of empirical studies undertaken by the Group on linkages of rupee NDF and onshore exchange rate market are given in Annex-I.Extension of RTGS customer window provides scope for extension of collateralised money markets. The Reserve Bank rbi forex trading hours, from time to time, been receiving requests for extension of timings for certain markets such as currency futures and Over-the-Counter OTC foreign exchange market. Living and entertainment iDiva MensXP. Based on the analysis and feedback of market participants, rbi forex trading hours, the decision to shorten the noon recess was taken while not making any other changes. An overview of category-wise participation in the three segments is provided in the following charts Chart 2. Top Searches Elon Musk. RBI has placed an 'Alert List' of entities which are neither authorised to deal in forex under the Foreign Exchange Management Act, FEMA nor authorised to operate electronic trading platforms for forex transactions on its website.