02 Apr 2024, 08:00 PM

Change in eligibility to trade in currency derivatives

Update [04/04/2024]: The deadline has been extended to 3rd May 2024 from 5th April 2024. Check the RBI press release here.

RBI has mandated traders to compulsorily have an underlying contracted exposure to foreign currency if they want to trade in the currency derivatives segment. You can also read the corresponding exchange circulars enforcing the RBI’s instructions below:

NSE circular
BSE circular

If a trader has an exposure greater than $100 million (i.e. notional contract value), they will be required to appoint a custodian participant or an authorised dealer. However, for traders with a smaller exposure, a declaration that you are trading currencies to hedge your contracted exposure will suffice.

If the declaration is not provided, you will not be allowed to take any fresh positions in the currency segment from 4th April, but you will be able to exit your existing positions. Do monitor your existing open positions since the liquidity may dry up leading up to Friday, 5th April 2024, when the RBI circular comes into effect.

RBI defines contracted exposure in the following way:

‘Contracted exposure’ means currency risk arising on account of current or capital account transactions permissible under the FEMA, 1999 or any rules or regulations made thereunder, that have been entered into.

To know more, click here.

How to submit the declaration form?

  1. Download the declaration form (PDF)
  2. Sign the declaration form (e-sign/wet sign)
  3. Create a ticket here to submit the soft copy of the signed form.

Note: Once you submit the declaration form, it may take up to 24 hours to enable the user to take fresh positions.

If you have any queries, please post them on TradingQ&A by clicking here.