|
RBI/2017-18/134
A. P. (DIR Series) Circular No. 18
February 26th, 2018
All Category - I Authorised Dealer banks
Madam/Sir,
Risk Management an d Inter-bank Dealings: Revised guidelines relating to
participation of a person resident in India and Foreign Portfolio Investor (FPI)
in the Exchange Traded Currency Derivatives (ETCD) Market
Attention of Authorized Dealers Category - I (AD Category - I) banks is
invited to the Foreign Exchange Management (Foreign Exchange Derivative
Contracts) Regulations, 2000 dated May 3, 2000 (Notification No. FEMA.25/RB-2000
dated May 3, 2000), as amended from time to time, A.P. (DIR Series) Circular No.
90 dated March 31, 2015 relating to participation of a person resident in India
in the Exchange traded currency derivatives (ETCD) market, A.P. (DIR Series)
Circular No. 91 dated March 31, 2015 relating to participation of a Foreign
Portfolio Investor (FPI) in the ETCD market.
2. Currently, persons
resident in India and FPIs are allowed to take a long (bought) or short (sold)
position in USD-INR upto USD 15 million per exchange without having to establish
existence of underlying exposure. In addition, residents & FPIs are allowed to
take long or short positions in EUR-INR, GBP-INR and JPY-INR pairs, all put
together, upto USD 5 million equivalent per exchange without having to establish
existence of any underlying exposure.
3. It has now been decided to
permit persons resident in India and FPIs to take positions (long or short),
without having to establish existence of underlying exposure, upto a single
limit of USD 100 million equivalent across all currency pairs involving INR, put
together, and combined across all exchanges.
4. The onus of complying
with the provisions of this circular rests with the participant in the ETCD
market and in case of any contravention the participant shall be liable to any
action that may be warranted as per the provisions of Foreign Exchange
Management Act, 1999 and the regulations, directions, etc. issued thereunder.
These limits shall also be monitored by the exchanges, and breaches, if any, may
be reported to the Reserve Bank of India.
5. All other operational
guidelines, terms and conditions shall remain unchanged.
6. This circular
has been issued under Sections 10(4) and 11(1) of the Foreign Exchange
Management Act, 1999 (42 of 1999) and is without prejudice to
permissions/approvals, if any, required under any other law.
Yours faithfully,
(T. Rabi Sankar)
Chief General Manager
|