An RBI working panel has suggested extending the forex market trading hours which will help in assessing demand and potential benefits. The panel has suggested setting trading hours from 9 am to 9 pm. In August 2018, the Reserve Bank of India (RBI) had decided to set a working panel to thoroughly review the timing of various markets it regulates. The review also included associated payment and settlement infrastructure. RBI is committed to regulate money market, Government Securities market, and foreign exchange market in the country.

According to the draft report of the working group, RBI is in a process to provide flexibility by reviewing and rationalizing foreign exchange regulation. Thus calibrated extension of market hours from 9 am to 9 pm may be considered to complete gauge demand and potential benefits.

The Fx brokerage‘ Association of India has set the market timing of interbank USD/INR forex transaction from 9 am to 5 pm. And some authorized dealers are allowed to carry retail transaction after the set timing. There is no limitation of time for transactions in cross currencies. Banks are free to set trade timing as per their internal policies.

The draft report also said, “Extension of exchange timings without corresponding extension in the OTC market could pose risk management issues (valuation and open position) for banks operating in both markets. Therefore, it is desirable to extend trading hours for both OTC and Exchanges.”

The working group has also suggested retaining current market timing for the G-sec market due to lack of demand from traders. Indian forex market is like a wholesale market and it is completely dominated by banks, forex brokers and corporate clients.