On Feb. 21, 2025, IND RBI finalized Reserve Bank of India (forward contracts in government securities) directions, 2025 based on feedback from market participants.
The updated notification was published in the official gazette on Feb. 13, 2025.
To enable transactions in forward contracts, Market-makers in OTC derivatives directions, Margining for non-centrally cleared OTC derivatives directions are revised.
These directions shall come into force with effect from May 2, 2025.
In Mar. 2025, IND INS permitted use of bond forwards for hedging, see #196644.
IND RBI released document titled Reserve Bank of India (bond forwards) directions, 2023 - draft, which outlines proposed IND RBI directions regarding bond forwards.
Invited comments on this proposal from banks, market participants, investors, others.
Follows IND CCIL Aug. 2021 issued proposal regarding forward trading, see #113937.
IND RBI said it has been expanding suite of interest rate derivative products available to market participants to manage interest rate risks; in addition, it said has received suggestions on the need to introduce bond forwards in government securities.
Draft directions on contracts to deliver government securities on a forward basis seek to enable market participants, especially long-term investors, to manage cash flows.
In addition, to manage interest rate risk; these directions shall apply to transactions in bond forwards undertaken in over-the-counter (also known as OTC) markets in India.
Draft directions include provisions re eligible market participants; underlying debt instrument; market-makers, users; directions for market makers; directions for users.
In addition, provisions re permissible venues; settlement and unwinding; reporting; valuation methodology; prudential norms and capital requirements; dissemination of data; other conditions; violations of directions; list of users in draft directions is broad.
Consultation End
The comment period for this consultation closes on Jan. 25, 2024.
On Feb. 21, 2025, IND RBI finalized Reserve Bank of India (forward contracts in government securities) directions, 2025 based on feedback from market participants.
The updated notification was published in the official gazette on Feb. 13, 2025.
To enable transactions in forward contracts, Market-makers in OTC derivatives directions, Margining for non-centrally cleared OTC derivatives directions are revised.
These directions shall come into force with effect from May 2, 2025.
In Mar. 2025, IND INS permitted use of bond forwards for hedging, see #196644.
Regulators
IND RBI
Entity Types
B/D; Corp; Inv Co; OTC
Reference
Nt RBI/2024-25/117, FMRD.DIRD.16/14.03.042/2024-25, 2/21/2025; CP, PR 2023-2024/1557, 12/28/2023
