The Hindu : RBI nod for CCIL's new forex clearing system

Online edition of India's National Newspaper
Friday, Jul 25, 2003

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Business

RBI nod for CCIL's new forex clearing system

By Our Special Correspondent

MUMBAI JULY 24. The Reserve Bank of India has given approval to `FX-Clear,' the forex dealing system of Clearing Corporation of India Ltd (CCIL). It will be launched on August 7. Out of 78 members of forex clearing and settlement system, 39 member banks (including State Bank of India and all other major market participants) are ready for the launch. Others are in the process of joining the system soon.

"Majority of the authorised dealers in India do not have access to the automatic foreign exchange order matching system, as they cannot afford the cost. With our forex dealing system, we expect all authorised dealers to start using the transparent dealing system and thereby helping in significantly improving the efficiency and transparency of the foreign exchange market in India,'' said R. H. Patil, Chairman, CCIL.

CCIL also proposed to provide the latest dealt rate of U.S. dollar/Indian rupee on its website, Dr. Patil added. FX-Clear covers the inter-bank U.S. dollar-Indian rupee spot and swap transactions and transactions in major cross currencies (Euro/dollar, dollar/yen, pound sterling/dollar) by introducing straight through processing (STP) of forex deals,

FX-Clear in tandem with CCIL's forex clearing and settlement system is poised to revolutionise the way treasuries operate in India.

While this system is available free of cost to all the forex clearing and settlement members of CCIL, it also enhances the depth of the market through wider participation of banks. At present many banks have not availed themselves of the services of the existing forex dealing system because of their high costs. The waiver by CCIL of set-up and usage costs will accelerate migration to a market friendly forex dealing system and enhance the depth and transparency of the forex market in India through wider participation of banks.

All deals concluded in dollar-rupee currency pair on the CCIL's dealing platform will be taken up for settlement by CCIL's forex clearing and settlement system.

This includes deals on order machine and negotiation modes. The deals done at FX-Clear automatically enjoy mitigation of counter party and default risk, as they are settled through the CCIL's forex clearing and settlement system that has an inbuilt robust risk management system.

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