The Reserve Bank said it is taking several steps to increase transparency in the markets for over-the-counter (OTC) foreign exchange, interest rate and credit derivatives.
As part of these measures, all transactions in OTC derivatives are reported by market-makers to the Trade Repository (TR) of the Clearing Corporation of India Limited (CCIL).
However, there is an element of non-transparency as a large number of offshore rupee derivative transactions are not reported, and therefore, not available to market participants. This shortcoming was partially addressed when standalone primary dealers were required to report all rupee derivative transactions undertaken globally by their related parties in October 2022.
Additionally, banks in India were required to report all rupee interest rate derivative transactions undertaken globally by their related parties by December 2025.
“In furtherance of this process of increasing transparency of the rupee derivative market, it is now proposed that all authorized dealer category-I banks will report foreign exchange derivative transactions with INR undertaken by their related parties globally,” the RBI said.
The resulting transparency will enable better pricing decisions by market participants, it said.
According to the draft guidelines, authorized dealer category-I banks will report all elements of covered transactions that are relevant to provide meaningful information about the transaction.
It will include, but not be limited to, notional value, counterparty name, maturity date, currency, specifications applicable to the transaction, it added.
The central bank has invited comments on the draft directive from market participants, stakeholders and other interested parties till March 9.
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