Informist, Wednesday, Sep 8, 2021

By Vaibhav Chakraborty and Pratigya Vajpayee

NEW DELHI/MUMBAI – The Fixed Income Money Markets and Derivatives Association on Monday discussed resumption of regular trading hours in the debt market, now that most lockdown restrictions in Mumbai have been lifted.

As per the feedback, most treasury officials said the current truncated trading hours should be increased only after the festival season ends in November, and that too in a phased manner, sources said.

Debt and money market segments regulated by the Reserve Bank of India are currently operating between 1000 IST and 1530 IST. In normal course, markets regulated by the RBI – overnight borrowing, government securities, short-term debt, foreign exchange, and rupee interest rate derivatives – function from 0900 IST to 1700 IST.

"Most were of the view that any move towards restoring market timings should only be made after Diwali, or once there is some clarity on the third wave," said an official aware of the discussions.

"Also, the increase should be in two phases – at first, 10 to 5 (1000-1700 IST) and then 9 to 5 (0900-1700 IST)." 

FIMMDA, the self-regulatory body for debt and money markets, is likely to have passed on this feedback to the RBI.

In April 2020, the central bank had slashed trading hours to 1000-1400 IST because of the operational dislocations following the outbreak of COVID-19. The timing was in November extended till 1530 IST as restrictions imposed by the Centre and the state governments eased.

Shortened trading hours had become necessary during the pandemic because treasuries of most financial institutions were functioning with skeletal staff, with employees largely working from home. But now that the total number of COVID-19 cases has declined, and a large part of the workforce in bank treasuries has been vaccinated, organisations have started the process of resuming work from office.

Treasuries of most financial institutions now have employees working from office premises on a rotational basis.

"In some cases, the return to office is happening function-wise, with forex taking preference because the system latency matters," said a senior treasury official with a large foreign bank.

"We have started going to office once or twice a week, but handling normal market hours would be a challenge right now," the official said. 

A drawback of truncated market timings is that these tend to hamper trade volumes. However, with the gilt market currently clocking daily trade turnover of around 600 bln rupees, which would be considered a robust number even with regular trading hours, several traders have been informally voicing views in favour of continuing with present market timings on a permanent basis.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Mainak Moitra

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