RBI defers forex derivatives rules

Move could significantly reduce the impact cost and cool down segment

- SACHIN KUMAR

GIVING A TEMPORARY relief to forex traders, the Reserve Bank of India (RBI) on Thursday deferred the implementation of new rules for foreign exchange derivatives to May 3.

The move could lead to significant reduction in the impact cost and cool down the exchange-traded currency derivatives (ETCD) market.

The central bank aims to give more time to market participants who could not unwind their currency derivatives positions by April 4, the earlier deadline, said experts.

In a notification, RBI said that the decision to deferit was taken 'inview of feedback received and recent developments'.

Said Jamal Mecklai, CEO, Mecklai Financial Services, "The extension is reasonable because people have lot of positions and if they all go to square-off tomorrow, the market will go crazy."

The revised rules, which were set to come into effect from April 5, were aimed to ensure that ETCDs can only be used for hedging purposes a position that has remained consistent over the years and "there is no change in the policy approach", the notification said.