SEBI tightens norms for currency derivatives to curb rupee's

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    Kiaria Yoshida
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    Securities and Exchange Board of India, SEBI has tightened the exposure norms for currency derivatives to check large scale speculations in the market. This will help the government efforts to stem fall in rupee value.

    The decision was taken in consultation with banking regulator RBI late last night by Sebi, which regulates the entire gamut of capital markets, including trading in currency derivatives.

    Currency derivative trading allows traders and investors to take forward views on various currency pairs, including rupee-dollar. The Indian currency fell to a record below 61 level against the US greenback yesterday. Sebi said in a circular that it is reducing the exposure that brokers and their clients can take on currency derivatives and also doubled their margins on dollar-rupee contracts.

    The exposure to all currency contracts for a broker has been capped at 15 per cent of their overall exposure or 50 million dollars, whichever is lower. For clients, this cap would be 6 per cent, or 10 million dollars, whichever is lower.

    The new norms would be applicable with
    effect from July 11. The current exposure limits for brokers and clients were the higher amounts of 15 per cent of their overall exposure or 50 million dollars and 6 per cent or 10 million dollars.

    The margin requirements are different across various categories and they are being increased by 100 per cent of the present rates for rupee-dollar derivative contracts.

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