Business » Markets

Updated: July 9, 2013 23:18 IST

RBI, SEBI step in to check speculation

Special Correspondent
Comment   ·   print   ·   T  T  

In a move the check the rupee volatility, the Reserve Bank of India (RBI) banned banks from proprietary trading in domestic currency futures and options, and the Securities and Exchange Board of India (SEBI) increased the margin requirement on domestic dollar-rupee forward trade.

“It has been decided that banks should not carry out any proprietary trading in the currency futures / exchange-traded currency options markets. In other words, any transaction by banks in these markets will have to be necessarily on behalf of their clients,” the RBI said. The apex bank also said that these instructions would come in to effect immediately and “shall be in force till further orders.”

SEBI, in the meanwhile, said that “in consultation with RBI and in view of the recent turbulent phase of extreme volatility in dollar-rupee exchange rate, it has been decided to curtail position limits and increase margin requirements for currency derivatives.”

SEBI increased initial and extreme loss margins by 100 per cent of the present rates for dollar-rupee contracts in currency derivatives. Further, it said that the gross open position of a client across all contracts shall not exceed 6 per cent of the total open interest or $10 million, whichever is lower.

In the case of a trading member who is not a bank, its gross open position across all contracts shall not exceed 15 per cent of the total open interest or $50 million, whichever is lower. However, SEBI asked exchanges to implement these provisions from July 11.

More In: Markets | Business
This article is closed for comments.
Please Email the Editor



Recent Article in Markets

Extending its losses, gold prices on Saturday dipped below the Rs 27,000-mark by losing Rs. 40 to trade at about 14-month low of Rs. 26,970 per ten gram. File photo

Gold falls below Rs.27,000-mark

Impact of poor global appetite for the yellow metal »