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Master Direction Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022. - FEMA - 21Extract ..... of undertaking a derivative transaction to reduce an identifiable and measurable risk. For the purpose of these directions, the relevant risks are commodity price risk and freight risk. (ii) Eligible entities - Eligible entities refers to residents other than Individuals. (iii) Direct Exposure to Commodity Price Risk - An eligible entity will be said to have direct exposure to commodity price risk if (a) It purchases/sells a commodity (in India or abroad) whose price is fixed by reference to an international benchmark; or (b) It purchases/sells a product (in India or abroad) which contains a commodity and the price of the product is linked to an international benchmark of the commodity. (iv) Indirect Exposure to Commodity Price Risk - An e ..... x x x x x Extracts x x x x x Master Direction Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022. - FEMA x x x x x Extracts x x x x x ..... eric products 5. Hedging of commodity price risk (i) Eligible entities having exposure to commodity price risk for any eligible commodity may hedge such exposure in overseas markets using any of the permitted products. (ii) Eligible entities having exposure to price risk of gold may hedge such exposure only on exchanges in the International Financial Services Centre (IFSC) recognised by the International Financial Services Centres Authority (IFSCA). 6. Hedging of freight risk: Eligible entities having exposure to freight risk may hedge such exposure in overseas markets by using any of the permitted products. 7. Other operational guidelines (i) Banks may permit eligible entities to hedge commodity price risk and freight risk overseas, includ ..... x x x x x Extracts x x x x x Master Direction Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022. - FEMA x x x x x Extracts x x x x x ..... ) All payments/receipts related to hedging of exposure to commodity price risk and freight risk shall be routed through a special account with the bank for this purpose. (v) Banks shall keep on their records full details of all hedge transactions and related remittances made by the entity. (vi) Banks shall obtain an annual certificate from the statutory auditors of the entity confirming that the hedge transactions and the margin remittances are in line with the exposure of the entity. The statutory auditor shall also comment on the risk management policy of the entity for hedging exposure to commodity price risk and freight risk and the appropriateness of the methodology to arrive at the quantum of these exposures. (vii) Banks shall underta ..... x x x x x Extracts x x x x x Master Direction Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022. - FEMA x x x x x Extracts x x x x x ..... P. (DIR Series) Circular No. 19 dated March 12, 2018 on Hedging of Commodity Price Risk and Freight Risk in Overseas Markets. (ii) A. P. (DIR Series) Circular No. 16 dated January 15, 2020 on Hedging of Commodity Price Risk and Freight Risk in Overseas Markets - Amendment. Annexure I Report - Hedging of Commodity Price Risk and Freight Risk in Overseas Markets during the Quarter ending _____ Name of the Authorised Dealer: 1. Commodity Exposure (Quantity) Hedges Booked (Quantity) Gross Outflow (USD Million) Gross Inflow (USD Million) Direct Indirect OTC Exchanges 2. Total outstanding SBLCs / Guarantees issued for hedging of commodity price risk: SBLCs outstanding (USD Million) Guarantees outstanding (USD Million) 3. SBLCs / Guarantees invoke ..... x x x x x Extracts x x x x x Master Direction Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022. - FEMA x x x x x Extracts x x x x x
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