REPORT 3sf

27

ANNEXURE 3: CURRENT STATUS ON OTC DERIVATIVE PRODUCTS

Requirement

(G-20)

Products

Trade

Repository

(for both

Interbank

And client

Trades)

Standardisation

Central

Clearing

(CCP)

Electronic

Trading

Platform

Higher

capital

/Margin

for

Non-

centrally

Clearing

OTC

Derivative

trades

Forex OTC

Derivatives

Forex

Forward

Available

for both

interbank

and client

trades

(FCY-INR

& FCY-

FCY).

Not available as

majority of

interbank trades

driven by

customized client

trades.

Guarantee

d Central

clearing

available.

RBI has

not

mandated

it.

No

exclusive

platform

available.

Can be

traded on

FX-

SWAP.

No

regulatory

Requireme-

nt

Forex

Swap

Available

for both

interbank

and client

trades

(FCY-INR

& FCY-

FCY).

Not available as

majority of

interbank trades

driven by

customized client

trades.

Guarantee

d Central

clearing

available.

RBI has

not

mandated

it.

Can be

traded on

CCIL and

Reuters trading

platform.

Majority of

trades done

through

brokers.

No

regulatory

Requireme-

nt

Forex

Option

Available

for both

interbank

and client

trades

(FCY-INR

& FCY-

FCY).

Not available as

majority of

interbank trades

driven by

customized client

trades.

Central

clearing

not

available.

Not

available.

No

regulatory

Requireme-

nt

Currency Swap

Available

for both

interbank

and client

trades

(FCY

-INR &

FCY-FCY).

Not available. Not

available.

Not

available.

No

regulatory

Requireme-

nt

(Source: Implementation group on OTC Derivatives market reforms, RBI)

28

ANNEXURE 4: SUMMARY OF RESPONSES

1. Is the position limits without underlying exposure low?

2. Should trading hours be extended beyond current timings?

29

3. Do you prefer introduction of Deliverable contracts in the Exchange?

4. Do you prefer introduction of Non-INR cross currency contracts (like EUR-USD, GBP-

USD) in the exchange?

30

5. Should margin requirements be relaxed?

6. Is there enough awareness among market participants about ETCD products?

31

7. Can introduction of contract of different lot sizes improve liquidity in the exchange?

8. Other Responses:

1. Some of the bankers believe that the cost of trading is increasing in the exchange

and the stamp duty charges can be reduced and rationalised across the country.

2. NRIs are significant participants to foreign exchange flows of our country, so

regulators can consider allowing them to ETCD in future.

3. The registration process for FPIs (particularly category III) should me made

simpler and all the requirement and rules must be made available clear from a

single reliable source.

4. International standards in reporting of currency derivatives can be adapted to

Indian markets and these advancements are expected by the FPIs.

5. All the requirements of G20 reform program for OTC derivatives should be made

mandatory by RBI

32

BIBLIOGRAPHY

1. RBIs master circular on Risk Management and Inter-bank dealings.

2. SEBI circulars for Exchange Traded Currency Derivatives segment.

3. RBI - SEBI standing technical committee report on Exchange traded currency futures.

4. BIS policy framework for non-centrally cleared derivatives as agreed by Basel

committee on banking supervision.

5. Non Deliverable Foreign Exchange Forward Market: An Overview by Sangita Misra

and Harendra Behera - Reserve Bank of India Occasional Papers.

6. NISM workbook for certification on Currency Derivatives.

7. FICCIs banking and finance 3 years of currency derivatives segment, January 2012.

8. Currency Futures Trading In India by Bh.L.Mohanraju, K.Neelima and B.Krishna

Prasad - Asian Journal of Multidisciplinary Studies, October 2014.

9. Over-the-counter derivative markets in India, Issues and perspectives by Shyamala

Gopinath, Deputy Governor, RBI.

10. Bank for International Settlements, Triennial Central Bank Survey, Global foreign

exchange market turnover in 2013.

33

CURRICULUM VITAE NAME : E. MARK LINEKAR

DATE OF BIRTH : 28 July, 1990

EDUCATIONAL QUALIFICATION : B.E

BRANCH : Electrical and Electronics

INSTITUTTION : Coimbatore Institute of Technology

WORK EXPERIENCE : 24 months at KEC International, KSA.