Bond St May Have 5-Day Week

The Reserve Bank of India is considering a proposal to keep the bond market closed on Saturdays, giving dealers a longer weekend.

Several reasons are cited for this. First, both the equity and foreign exchange markets are closed on Saturdays and at a time when integrated markets are becoming the rule, there is no point in keeping the bond market open on Saturday.

Secondly, trading in a thin market on Saturday distorts the yield curve. A few relatively big deals in a thin market can have an impact on the yield curve, which then becomes the benchmark for the Monday market.

 

On average, the trading volume on Saturdays, at Rs 2,000 crore, is roughly half of the trading volume on other days. Government securities are traded for two hours on Saturdays.

The Reserve Bank has had a round of meetings with market participants as well as the Fixed Income & Money Market Dealers' Association (FIMMDA) on this issue and a technical panel is looking into all aspects.

The Reserve Bank does not want to disturb the country