Reserve Bank of India’s Stance on Rupee Derivatives Unchanged
Brokers’ Concerns Addressed
MUMBAI (Reuters) – Reserve Bank of India (RBI) maintains its stance on exchange-traded rupee derivatives, dispelling brokerages’ fears about proving clients’ forex exposure.
No Change in Requirements
“The underlying exposure requirement remains unchanged,” confirmed a reliable source from the central bank.
Clarification on Circular
Three months back, the RBI’s circular led to misconceptions among brokers about verifying underlying exposure before allowing trades.
Voluntary Actions by Brokerages
Despite exchanges reiterating the rule’s implementation, brokerages independently asked clients for proof of exposure, not influenced by the central bank.
Impact on Market Participants
Brokers’ apprehensions about proving exposure potentially limiting market participants’ involvement refute the primary purpose of forex derivative contracts.
Diverse Volume Contributors
NSE data highlights that 80% of rupee derivatives turnover in February stemmed from proprietary traders and individual investors, likely unable to furnish required proof.
The need for proof of underlying exposure in forex trading segments has sparked concerns among market participants, potentially affecting diverse volume contributors like proprietary traders and individual investors. The RBI’s unchanged stance on rupee derivatives aims to ensure market stability without unduly burdening participants. The industry anticipates further clarity on this issue to facilitate smoother trading operations.
