SEBI allows investors to trade $5 million in rupee derivatives
Domestic and foreign portfolio investors can now take positions in rupee-linked contracts without proving underlying exposure up to a specific limit.
The Securities and Exchange Board of India (SEBI) has revised currency derivatives norms, permitting domestic and foreign portfolio investors (FPIs) to trade up to $5 million in rupee-linked contracts without establishing underlying exposure, according to Moneycontrol and ANI.
Under the new framework issued on Thursday, investors can hold long or short positions up to a combined notional value of $5 million. This limit applies to all currency pairs involving the Indian rupee across all recognised stock exchanges.
For FPIs, the regulator specified that total short positions across all foreign currency-rupee contracts must stay within the $5 million cap. If FPIs wish to take long positions exceeding this amount, they must possess underlying exposure in Indian equity or debt securities, including mutual fund units.
Domestic clients may exceed the $5 million threshold provided they meet the conditions set by the Reserve Bank of India (RBI) in its October 10 circular and master direction on Risk Management and Inter-Bank Dealings.
The SEBI circular aligns with previous changes made by the RBI in October regarding foreign exchange derivatives. The regulator has instructed stock exchanges and clearing corporations to update their systems and regulations to implement these changes and report their status back to the authority.
