RBI holds firm on rupee derivatives stance, defers norm implementation to May 3

The Reserve Bank of India (RBI) on Thursday reiterated that its stance on the regulatory framework for Exchange Traded Currency Derivatives (ETCD) had remained consistent over the years and stressed that there would be no change in its policy approach. 

However, following feedback from participants and recent developments, the RBI said it was deferring the implementation of currency derivative regulations to May 3, from the earlier stipulated date of April 5. 

Stating that in the recent period some concerns had been expressed about participation in the ETCD market in the light of the circular issued on January 5, the RBI said the circular had set out the Master Direction and reiterated the regulatory framework for participation in ETCDs involving the rupee without any change. 

“As hitherto, participants with a valid underlying contracted exposure can continue to enter into ETCDs involving the Indian Rupee up to a limit of $100 million without having to produce documentary evidence of the underlying exposure,” the RBI said.

The RBI is emphasising the norm relating to ‘underlying contracted exposure’ to curb the potential for speculative trading in currency derivatives.