Mumbai, Aug 6 (UNI) The Reserve Bank of India today issued fresh guidelines on Exchange Currency Future trading.
The apex bank issued directions covering the framework for the trading of Currency Futures in recognised exchanges, which have been finalised in consultation with Securities and Exchange Board of India (SEBI) and representatives of various market participants.
''These directions also lay down the prudential parameters for the participation of banks in the currency futures market and the directions will come into effect immediately,'' RBI said in a statment today.
These directions will be called the ''Currency Futures (Reserve Bank) Directions, 2008'' and they shall come into force with effect from August 6, 2008, the central bank notified.
It directed that only 'persons resident in India' may purchase or sell currency futures to hedge an exposure to foreign exchange rate risk or otherwise.
Only USD-INR contracts would be allowed to be traded and the size of each contract shall be USD 1000, which shall be quoted and settled in Indian Rupees and the maturity of the contracts shall not exceed 12 months, RBI stated.
Banks authorized by the RBI with minimum net worth of Rs 500 crore, net NPA not exceeding 3 per cent and maintianing a minimum capital adequacy (CAR) of 10 per cent will be permitted 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, RBI notified.
Banks, which do not meet the above minimum prudential requirements and AD Category - I banks which are Urban Co-operative banks or State Co-operative banks, can participate in the currency futures market only as clients, subject to approval from the respective regulatory Departments of the Reserve Bank, the apex bank added.
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