Risk Management and Inter-bank Dealings: Guidelines relating to participation of Residents in the Exchange Traded Currency Derivatives (ETCD) market

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....0 dated May 3, 2000), as amended from time to time, the Currency Futures (Reserve Bank) Directions, 2008 dated August 6, 2008 and Exchange Traded Currency Options (Reserve Bank) Directions, 2010 dated July 30, 2010 as amended from time to time and also AP (Dir Series) circular No.5 dated August 6, 2008 and No.5 dated July 30, 2010 in terms of which persons resident in India may participate in the ETCD market in India subject to the terms and conditions mentioned in the aforementioned notifications and guidelines, ibid. Attention is also drawn to A.P. (DIR Series) circular No. 86 dated March 1, 2013 and A.P. (DIR Series) circular no. 7 dated July 8, 2013 in terms of which restrictions on the proprietary trading by AD Category - I banks in th....

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....(b) fifty per cent of the higher of the (I) average of their last three years' imports turnover or (II) the previous year's turnover, in case they are importers. • The participants shall furnish, to the trading member of the exchange, a certificate(s) from their statutory auditors regarding the limit(s) mentioned above along with an undertaking signed by the Chief Financial Officer (CFO) to the effect that at all time, the sum total of the outstanding OTC derivative contracts and the outstanding ETCD contracts shall be corresponding to the actual exports or imports contracted, as the case may be. • Based on the above certificate, a trading member can book ETCD contracts upto fifty per cent of the eligible limit [as....

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....en days from the said dates, to the effect that during the preceding six months, the derivative contracts entered into by the participant in the OTC and the ETCD markets put together did not exceed the actual exposure. c. It may be noted that the onus of complying with the provisions of this circular rests with the participant and in case of any contravention the participant shall render itself liable to any action that may be warranted as per the provisions of Foreign Exchange Management Act, 1999 and those of the Regulations, Directions, etc. framed thereunder. 3. In terms of A.P. (DIR Series) Circular 86 dated March 1, 2013, AD Cat-I banks were not allowed to offset their positions in the ETCD market against the positions in the OT....