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Guidelines on trading of Currency Futures and Exchange Traded Currency Options in Recognized Stock Exchanges - Introduction of Cross-Currency Futures and Exchange Traded Option Contracts

FEMA - 35 - Dated:- 10-12-2015 - RBI/2015-16/267 A.P. (DIR Series) Circular No. 35 December 10, 2015 To All Authorised Dealer Category - I Banks Madam / Sir, 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, the Currency Futures (Reserve Bank) Directions, 2008 dated August .....

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nditions mentioned in the aforementioned notifications and guidelines, ibid. 2. Currently market participants, i.e., residents and eligible non-resident market participants are permitted to trade in US Dollar (USD) - Indian Rupee (INR), Euro (EUR)-INR, Pound Sterling (GBP)-INR and Japanese Yen (JPY)-INR currency futures contracts and USD-INR currency option contract in recognized stock exchanges. In order to enable direct hedging of exposures in foreign currencies and facilitate execution of cro .....

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ntract, with immediate effect. 3. Accordingly, the Notifications No.FMRD.1 / ED (CS) - 2015 dated December 10, 2015 and No. FMRD. 2/ ED (CS) - 2015 dated December 10, 2015 viz. Currency Futures (Reserve Bank) (Amendment) Directions, 2015 and Exchange Traded Currency Options (Reserve Bank) (Amendment) Directions, 2015 amending the Directions notified vide Notification No.FED.1/DG (SG) - 2008 dated August 6, 2008 and Notification No. FED.1 / ED (HRK) - 2010 dated July 30, 2010 respectively have be .....

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idents and FPIs, without having to establish underlying exposure, shall remain unchanged. The hedging procedure for residents as laid down in A.P. (DIR Series) circular No. 147 dated June 20, 2014 and for FPIs as laid down in A.P. (DIR Series) circular no. 148 dated June 20, 2014 shall also remain unchanged. A summary of the position limits is provided in the Table given in Annex III. 6. AD Category-I banks may undertake trading in all permitted exchange traded currency derivatives within their .....

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e above Directions have been issued under Section 45W of the Reserve Bank of India Act, 1934 and this circular has been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (R Subramanian) Chief General Manager Annex I to A.P. (DIR Series) Circular No. 35 dated December 10, 2015 Currency Futures (Reserve Bank) (Amendment) Directions, 2015 Notifi .....

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lled the Currency Futures (Reserve Bank) (Amendment) Directions, 2015 and they shall come into force with effect from December 10th, 2015. 2. Amendment to Currency Futures (Reserve Bank) Directions, 2008 (ii) In paragraph 4, (a) the existing clause (a), shall be substituted by: (a) Foreign Currency-Indian Rupee contracts, viz. USD-INR, EUR-INR, GBP-INR and JPY-INR and Cross Currency contracts (not involving the Indian Rupee), viz. EUR-USD, GBP-USD and USD-JPY are allowed to be traded. (b) the ex .....

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ed in JPY. All cross currency contracts shall be settled in Indian Rupees as per the method approved by Reserve Bank. (d) the existing clause (e), shall be substituted by: (e) The settlement price for USD-INR shall be the Reserve Bank s Reference Rate and for Euro-INR, GBP-INR and JPY-INR contracts shall be the exchange rates published by the Reserve Bank in its press release on the last trading day. The settlement price in Indian Rupees of the cross-currency contracts shall be computed using th .....

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ancial system of the country to its advantage, in exercise of its powers conferred by section 45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, hereby gives the following directions to all the persons dealing in currency futures. 1. Short title and commencement of the directions These directions may be called the Exchange Traded Currency Options (Reserve Bank) (Amendment) Directions, 2015 and they shall come into force with effect from December 10th, 20 .....

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e underlying for the currency option shall be the spot rate of the corresponding permitted currency pair. (b) for sub-para (c), the following shall be substituted: (c) The size of the USD-INR and USD-JPY contracts shall be USD 1000, of EUR-INR and EUR-USD contracts shall be EUR 1000, of GBP-INR and GBP-USD contracts shall be GBP 1000 and JPY-INR contract shall be JPY 100,000. (c) for sub-para (d), the following shall be substituted: (d) The premium for all contracts involving the Indian Rupee sh .....

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para (g), the following shall be substituted: (g) The settlement price for USD-INR option contract shall be the Reserve Bank s Reference Rate and for Euro-INR, GBP-INR and JPY-INR contracts shall be the exchange rates published by the Reserve Bank in its press release on the expiry date of the contract. The settlement price in Indian Rupees of the cross-currency contracts shall be computed using the Reserve Bank s USD-INR Reference Rate and the corresponding exchange rate published by Reserve Ba .....

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