(*3*)The RBI emphasised that the regulatory framework for ETCDs has remained constant through the years and that there was no change within the central financial institution’s coverage strategy.
The RBI says it had permitted customers, for the convenience of doing enterprise, to take positions of as much as $100 million throughout exchanges with out offering documentary proof to determine the underlying publicity.
The Reserve Bank of India on Thursday delayed the implementation of its consolidated instructions for alternate-traded foreign money derivatives (ETCD) by a month, a transfer that ought to ease the panic seen available in the market this week.
The Indian rupee’s alternate-traded choices went right into a tizzy on Wednesday and Thursday after brokers requested purchasers to submit proof of underlying publicity on their by-product contracts or unwind their current positions, market members mentioned.
“In view of feedback received and recent developments, it has been decided that these directions will now come into effect from Friday, May 03, 2024,” RBI mentioned.
The central financial institution mentioned it had permitted customers, for the convenience of doing enterprise, to take positions of as much as $100 million throughout exchanges with out offering documentary proof to determine the underlying publicity.
However, it didn’t present any exemptions from the requirement of getting the publicity, a requirement that has at all times existed.
The RBI emphasised that the regulatory framework for ETCDs has remained constant through the years and that there was no change within the central financial institution’s coverage strategy.
“It prima facie looks like an extension so that participants have time to close out their positions,” mentioned Abhilash Koikkara, head of foreign exchange and charges at Nuvama Professional Clients Group.
“The notification explicitly mentions that exchange traded derivatives can only be used by participants having valid underlying (exposure). Nuvama will continue to ask for an undertaking from its clients to show that they have contracted exposure.”
