Press Information Bureau

Government of India

Ministry of Finance

30-November-2012 17:54 IST

The Reserve Bank of India (RBI) has issued circular dated November 5, 2012, permitting Scheduled Commercial Banks (SCBs) to become members of the stock exchanges recognized by Securities and Exchange Board of India (SEBI) for the purpose of undertaking proprietary transactions in the corporate bond market. The SCBs have to satisfy the membership criteria of the stock exchanges and also comply with the regulatory norms laid down by SEBI and the respective stock exchanges while becoming members of approved stock exchanges. In the past, RBI, vide circular dated August 06, 2008, had permitted ‘Authorized Dealer (AD) Category-I bank’ to become trading and clearing members of the currency futures market of the recognized stock exchanges, on their own account and on behalf of their clients, subject to fulfilling certain minimum prudential requirements. Further, SCBs can seek membership of the Futures & Options segment of the stock exchanges for the purpose of undertaking proprietary transactions for hedging and trading in interest rate risk.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha today.

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DSM/RS/bs

Scheduled commercial banks permitted exchange membership for proprietary corporate bond trading, subject to membership and regulatory compliance. Scheduled Commercial Banks may obtain membership of SEBI-recognized stock exchanges to undertake proprietary transactions in the corporate bond market, provided they satisfy the exchanges' membership criteria and comply with the regulatory norms and prudential requirements prescribed by the securities regulator and the exchanges. Banks may also seek membership of Futures & Options segments to carry out proprietary hedging and trading in interest rate risk, subject to the same conditional compliance.