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Risk Management and Inter-bank Dealings: Attention is also drawn to A. DIR Series circular No. DIR Series circular no. In terms of the present regulatory framework, domestic participants in the currency futures and exchange traded options markets are not required to have any underlying exposure while requirement of underlying is mandatory for taking a position in the over-the-counter OTC derivatives markets.
With a view to bringing about an alignment between the two markets, henceforth domestic participants in the currency futures and exchange traded currency options will be subject to the following terms and conditions:. Domestic participants shall be allowed to take a long bought as well as short sold position upto USD 10 million per exchange without having to establish the existence of any underlying exposure.
For the purpose of convenience, exchanges may prescribe a fixed limit for the contracts in currencies other than USD such that the limit is within the equivalent of USD 10 million. Domestic tradin plattform binare online who want to take a position exceeding USD 10 million in the ETCD market will have to establish the existence of an underlying exposure. The procedure for the same shall be as under:.
The participants shall furnish, to the trading member of the exchange, a certificate s from their statutory auditors regarding the limit s mentioned above along with an undertaking signed by the Chief Proprietary trading by banks in india Officer CFO to the effect that at all time, the sum total of the outstanding OTC derivative contracts and the outstanding ETCD contracts shall be corresponding to the actual exports or imports contracted, as the case may be.
Based on the above certificate, a trading member proprietary trading by banks in india book ETCD contracts upto fifty per cent of the eligible limit [as at paragraph i above] on behalf of the concerned customer. If a participant wishes to take position beyond the fifty per cent of the eligible limit in the ETCD, it has to produce a certificate from the statutory auditors certifying that the sum total of the outstanding OTC derivative contracts and outstanding ETCD contracts has generally been in correspondence with the eligible limits.
Based on such a certificate, the trading member can book ETCD contracts beyond fifty per cent of the limit and up to limit mentioned in paragraph i above. All participants in the ETCD market, except those covered by paragraph iv above, will be required to submit to the concerned trading member of the exchange a half-yearly certificate from their statutory auditors as on March 31st and September 30th, within fifteen days from the said dates, to the effect that during the preceding six months, the derivative contracts entered into by the participant in the OTC and the ETCD markets put together did not exceed the actual exposure.
It may be noted that the onus of complying with the provisions of this circular rests with the participant and in case of any contravention the participant shall render itself liable to any action that may be warranted as per the provisions of Foreign Exchange Management Act, and those of the Regulations, Directions, etc.
In terms of A. Keeping in view the evolving market conditions, it has now been decided that:. Keeping in view the volatility in the foreign exchange market, Reserve Bank may however stipulate a separate sub-limit of the NOPL as a percentage thereof exclusively for the OTC market as and when required.
Save and except as mentioned above, there will be no other upper limit on proprietary trading by banks in india position that can be taken by any participant, resident or non-resident, in the ETCD market. The exchanges under appropriate directions from SEBI may however impose any limit for risk management and preserving market integrity. Skip to main content. Search the Website Search. Notifications kb Risk Management and Inter-bank Dealings: With a view to bringing about an alignment between the two markets, henceforth domestic participants in the currency futures and exchange traded currency options will be subject proprietary trading by banks in india the following terms and conditions: The procedure for the proprietary trading by banks in india shall be as under: Keeping in view the evolving market conditions, it has now been decided that: