RBI Tightens Regulations on Foreign Exchange Derivatives Market
What happened
The Reserve Bank of India tightened regulations governing the foreign exchange derivatives market. The threshold for taking certain positions without establishing underlying exposure was reduced from US$100mn to US$5mn equivalent. The central bank also prohibited the rebooking of cancelled contracts and introduced a new cash reserve requirement for specified transactions.
From moneylife.in
Why it matters
The measures are intended to ensure the orderly functioning of the foreign exchange market. The reduction of thresholds and new requirements directly impacts the market structure and trading of the Indian Rupee in derivatives.
From moneylife.in
Who's involved
- Reserve Bank of IndiaCentral bank that implemented the stricter rules on foreign exchange derivatives.
- ICICI BankAuthorized Dealer that must obtain undertakings from customers regarding hedging.
- Indian RupeeOfficial currency of the Republic of India, which is subject to the new derivative rules.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- ICICI BankSpeculative
ICICI Bank could face increased compliance costs and operational risk management requirements as an Authorized Dealer.
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The entities involved
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Reserve Bank of India
central bank of India
Related events
- RBI manages liquidity via foreign-exchange swaps.
- The Reserve Bank of India announced regulatory curbs in New Delhi.
- RBI has imposed operational restrictions on Bhagat Urban Co-operative Bank Ltd. due to financial instability.
- The Reserve Bank of India issues new banking rules in Mumbai.
- The Reserve Bank of India manages India's foreign exchange market, with Poonam Gupta serving as Deputy Governor.