RBI defers implementing directions on exchange-traded forex derivatives to May 3

The Reserve Bank of India (RBI) has announced an extension of the deadline for implementing rules regarding exchange-traded forex derivatives to May 3, extending it from the previous deadline of April 5. This decision comes following concerns raised regarding participation in the exchange-traded currency derivatives (ETCD) market in light of the RBI’s currency derivative norms.

The RBI emphasized that the regulatory framework for ETCDs has remained consistent over the years and that there is no change in the RBI’s policy approach. This extension was made after considering feedback and concerns from various stakeholders.

According to a circular issued on January 5, investors must ensure the existence of a valid underlying contracted exposure, which has not been hedged using any other derivative contract. They should also be able to establish the same if required. The term “underlying” in derivatives contracts refers to the order bill or receipt for exporters and importers, or documents supporting the transaction in the case of remittances.