Exchange Traded Currency Derivatives : RBI
The Reserve Bank of India (RBI) has postponed the implementation of its new norms for the exchange-traded currency derivatives (ETCD) market.
- This decision follows concerns raised by market participants regarding participation in the ETCD market, which led to increased volatility in the forex market.
- The new norms, aimed to allow users to take positions in the foreign exchange derivatives market without needing to establish the existence of underlying exposure, up to a single limit of $100 million equivalent across all currency pairs involving the rupee.
- However, the RBI emphasized that the regulatory framework for ETCDs remains consistent, guided by the Foreign Exchange Management Act (FEMA), 1999.
- Users are required to ensure compliance with the requirement of having underlying exposure, and the limit for taking positions was subsequently amended to a single limit of $100 million combined across all exchanges.
