MUMBAI: RBI governor Shaktikanta Das has urged banks to increase their involvement in the rupee derivatives market, both domestically and internationally, and to ensure that retail customers are not disadvantaged in the foreign exchange market. He also called on banks to stop providing services to unauthorised forex platforms.
“Although banks and other market participants have made considerable progress, the participation of domestic banks in derivatives markets remains limited, with only a small number of active market-makers.The participation of Indian banks in global markets is growing, but it is still quite small,” said Das.
The governor’s comments come after RBI’s crackdown on speculative trading in exchange-traded foreign currency derivatives, which was deemed a violation of FEMA regulations. In Jan, RBI stated that only those with an underlying exposure to foreign exchange could participate in the derivatives market.
Das, who was speaking at a conference of the Fixed Income and Money Market Derivatives Dealers Association (FIMMDA) in Barcelona on Monday, said that domestic banks are dealing with market-makers in global markets rather than with end clients, and they have yet to emerge as significant market-makers globally.
“Going forward, our focus should be on enhancing and widening participation of Indian players in markets for rupee derivatives, both domestically and offshore, while being prudent,” said Das. The governor also requested that banks protect the interests of small customers when trading in forex, pointing out that transparency in pricing is still a work in progress and that more can be done. “Retail customers are yet to receive a deal that is equal to that of large customers,” said Das.
“Although banks and other market participants have made considerable progress, the participation of domestic banks in derivatives markets remains limited, with only a small number of active market-makers.The participation of Indian banks in global markets is growing, but it is still quite small,” said Das.
The governor’s comments come after RBI’s crackdown on speculative trading in exchange-traded foreign currency derivatives, which was deemed a violation of FEMA regulations. In Jan, RBI stated that only those with an underlying exposure to foreign exchange could participate in the derivatives market.
Das, who was speaking at a conference of the Fixed Income and Money Market Derivatives Dealers Association (FIMMDA) in Barcelona on Monday, said that domestic banks are dealing with market-makers in global markets rather than with end clients, and they have yet to emerge as significant market-makers globally.
“Going forward, our focus should be on enhancing and widening participation of Indian players in markets for rupee derivatives, both domestically and offshore, while being prudent,” said Das. The governor also requested that banks protect the interests of small customers when trading in forex, pointing out that transparency in pricing is still a work in progress and that more can be done. “Retail customers are yet to receive a deal that is equal to that of large customers,” said Das.