Trading in ETCD without establishing the existence of any underlying exposure has been going on since 2007, when RBI allowed currency futures to be traded on the exchanges approved by the Securities and Exchange Board of India (Sebi). The RBI'S AP (DIR) Circular no.147 dated June 20, 2014, Master Direction no.1/2016-17 dated July 5, 2016 and AP (DIR) Circular no.29 dated April 7, 2020 were so worded that the market participants, RBI and Sebi believed that underlying exposure was not required.
The limit for such trading was $10 million equivalent of notional value (outstanding at any point in time), subject to a single limit of $100 million equivalent across all currency pairs involving Indian rupee (INR), put together, and combined across all exchanges.
The trading volumes grew steadily and there was hardly any default.
Most participants knew the market intricacies.
Diese Geschichte stammt aus der April 15, 2024-Ausgabe von Business Standard.
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