Date: 2020-05-18Category: Not ApplicableState: Union GovernmentCountry: India
Reporting Platform for OTC Derivatives – Transactions undertaken by IFSC Banking Units (IBUs) and non-deliverable derivative contracts (involving Rupee or otherwise)
**Summary:**
This Reserve Bank of India (RBI) circular, reference number FMRD.FMID.2602.05.002/2019-20 dated May 18, 2020, outlines reporting requirements for over-the-counter (OTC) derivative transactions undertaken by International Financial Services Centre (IFSC) Banking Units (IBUs) and non-deliverable derivative contracts (NDDCs) involving the Rupee or otherwise.
Effective June 1, 2020, all banks in India with an Authorised Dealer Category-I license under FEMA, 1999, operating IBUs are required to report all OTC foreign exchange, interest rate, and credit derivative transactions (both interbank and client) to the Clearing Corporation of India Ltd. (CCIL)'s reporting platform. This includes transactions undertaken by IBUs, branches in India, or foreign branches of foreign banks operating in India (through any branch of the parent bank).
Specifically, all foreign exchange NDDCs involving the Rupee or otherwise undertaken by these entities must be reported to the CCIL's platform. IBUs were permitted to undertake derivative transactions including structured products that the banks operating in India have been allowed to undertake as per the extant RBI directions. For undertaking any other derivative product, IBUs are required to obtain the prior approval of the RBI.
As a one-time measure, all matured and outstanding transactions as of May 31, 2020, must be reported by July 31, 2020. The CCIL will communicate the reporting methodology to its members.
These directions are issued under Section 45W of the Reserve Bank of India Act, 1934.
For inquiries, contact the Financial Markets Regulation Department, Central Office Building, 9th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001, India. Telephone: +91 22 2260 1000, +91 22 22702290. Email: cgmfmrdrbi.org.in.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking sector and monetary policy.
IFSC Banking Units (IBUs): Banking units operating in International Financial Services Centres in India.
Over-the-Counter (OTC) Derivatives Transactions: Derivative transactions that are not conducted through an exchange or central counterparty.
A.P. DIR Series circular no.23: A circular issued by the Reserve Bank of India providing directions related to banking operations.
Foreign Exchange Management Act (FEMA), 1999: An act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Nondeliverable Derivative Contracts (NDDCs): Derivative contracts where the parties agree to settle the difference between the contracted price or rate and the actual price or rate on an agreed date.
Clearing Corporation of India (CCIL): An organization that provides central counterparty and trade reporting services for various financial markets in India.
Mumbai, Maharashtra: A city in India where the Financial Markets Regulation Department, Central Office Building of RBI is located.
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2019-20/233
FMRD.FMID.26/02.05.002/2019-20 May 18, 2020
All Authorised Dealer Category-I Banks
Madam/Sir,
Reporting Platform for OTC Derivatives – Transactions undertaken by IFSC
Banking Units (IBUs) and non-deliverable derivative contracts (involving Rupee
or otherwise)
In terms of A.P. (DIR Series) circular no.23 dated March 27, 2020, banks in India
having an Authorised Dealer Category-1 license under FEMA, 1999, and operating
IBUs have been permitted, with effect from June 1, 2020, to offer non-deliverable
derivative contracts (NDDCs) involving the Rupee, or otherwise, to persons not
resident in India. Banks can undertake such transactions through their IBUs or through
their branches in India or through their foreign branches (in case of foreign banks
operating in India, through any branch of the parent bank).
2. All foreign exchange non-deliverable derivative contracts (involving Rupee or
otherwise) undertaken by banks in India through their IBUs or through their branches
in India or through their foreign branches (in case of foreign banks operating in India,
through any branch of the parent bank), shall be reported to CCIL’s reporting platform
with effect from June 1, 2020.
3. Further, in terms of circular no. DBR.IBD.BC.14570/23.13.004/2014-15 dated April
01, 2015, as amended from time to time, IBUs were permitted to undertake derivative
transactions including structured products that the banks operating in India have been
allowed to undertake as per the extant RBI directions. For undertaking any other
derivative product, IBUs are required to obtain the prior approval of the RBI.
िव�ीय बाज़ार िविनयमन िवभाग,क��ीय कायार्लयभवन, नौव�मंिजलशहीद भगत �सहं मागर्, फोटर्,मुंबई .भारत
फोन ( 2260 1000,फैक्स 22702290 ईमेल
, –400001
Financial Markets Regulation Department, Central Office Building, 9th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. India
: 91-22) : (91-22) - : cgmfmrd@rbi.org.in
Tel: (91-22) 2260 1000, Fax: (91-22) 22702290 e-mail- cgmfmrd@rbi.org.in
िहन्दी आसान है, इसका �योग बढ़ाइए4. RBI has mandated that all OTC foreign exchange, interest rate and credit derivative
transactions, both inter-bank and client, will be reported to CCIL’s trade reporting
platform. The matter has been further discussed with banks operating IBUs and CCIL.
Accordingly, it has been decided that IBUs shall report all OTC foreign exchange,
interest rate and credit derivative transactions - both interbank and client transactions
- undertaken by them to CCIL’s reporting platform with effect from June 1, 2020.
Additionally, as a one-time measure to ensure completeness of data, all matured and
outstanding transactions as on May 31, 2020, shall be reported by July 31, 2020.
5. The Clearing Corporation of India (CCIL) shall communicate the methodology of
such reporting to its members.
6. These directions are issued under the powers vested in the Reserve Bank of India
under Section 45W of the Reserve Bank of India Act, 1934 and is without prejudice to
permissions/ approvals, if any, required under any other law.
Yours faithfully,
(Dimple Bhandia)
General Manager (O-i-C)
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