Indias Central Bank liberalises swap transactions.
RBI today revised guidelines on foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term derivative contracts, removing the cap of USD 100 million net limit by a bank on swap transactions.
The move will help companies to increase net supply of foreign currency.
"On a review, it has been decided to remove the above limit of USD 100 million placed for these swap transactions," the Reserve Bank said in a notification.
As per the guidelines issued in 2010, swap transactions by banks acting as intermediaries were allowed by matching the requirements of corporate counter-parties.
While no limit was placed for undertaking Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term to facilitate customers to hedge their foreign exchange exposures, a "limit of USD 100 million was placed for net supply of foreign exchange in the market on account of swaps which facilitate customers to assume foreign currency liability".
That means each bank had to observe a net limit of USD 100 million when exposure of all such swaps are combined.
According to experts, the move is intended to allow banks to sell more currency swaps to companies with overseas debt at a time when the currency market is highly volatile.
RBI had in December 2010 issued final guidelines on Over The Counter Foreign Exchange Derivatives and Overseas Hedging of Commodity and Freight Prices. The norms came into effect from February this year.
RBI had allowed companies having net worth of Rs 100 crore to enter such contracts. However, companies were not allowed to write options on a stand-alone basis or enter into options such as leveraged structures and barrier options.
RBI has been continuing its witch hunt on the $4trillion a day global FX market, giving cautions to bank when sending funds cross borders.
Click here to access your latest copy of the Forex Magnates Retail Forex Industry Report.
RBI today revised guidelines on foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term derivative contracts, removing the cap of USD 100 million net limit by a bank on swap transactions.
The move will help companies to increase net supply of foreign currency.
"On a review, it has been decided to remove the above limit of USD 100 million placed for these swap transactions," the Reserve Bank said in a notification.
As per the guidelines issued in 2010, swap transactions by banks acting as intermediaries were allowed by matching the requirements of corporate counter-parties.
While no limit was placed for undertaking Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term to facilitate customers to hedge their foreign exchange exposures, a "limit of USD 100 million was placed for net supply of foreign exchange in the market on account of swaps which facilitate customers to assume foreign currency liability".
That means each bank had to observe a net limit of USD 100 million when exposure of all such swaps are combined.
According to experts, the move is intended to allow banks to sell more currency swaps to companies with overseas debt at a time when the currency market is highly volatile.
RBI had in December 2010 issued final guidelines on Over The Counter Foreign Exchange Derivatives and Overseas Hedging of Commodity and Freight Prices. The norms came into effect from February this year.
RBI had allowed companies having net worth of Rs 100 crore to enter such contracts. However, companies were not allowed to write options on a stand-alone basis or enter into options such as leveraged structures and barrier options.
RBI has been continuing its witch hunt on the $4trillion a day global FX market, giving cautions to bank when sending funds cross borders.
Click here to access your latest copy of the Forex Magnates Retail Forex Industry Report.