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NOTICES
Notice No.   20191113-18   Notice Date   13 Nov 2019
Category   Settlement/RMS   Segment   Currency Derivatives
Subject   Position Limits for Foreign Portfolio Investors – Currency Derivatives
 
Content

With reference to SEBI Circular IMD/FPI&C/CIR/P/2019/124 on Operational Guidelines for FPIs & DDPs under SEBI (Foreign Portfolio Investors), Regulations 2019 and for Eligible Foreign Investors dated November 05, 2019, the revised position limits for various category of FPIs in Currency Derivatives  shall be as under:

Product

FPI Category I and FPI Category II

(other than individuals, family offices and corporates)

FPI Category II

(individuals, family offices and corporates)

USD-INR

Gross open position across all contracts shall not exceed 15% of the total open interest or USD 100 million, whichever is higher.

Gross open position across all contracts shall not exceed 6% of the total open interest or USD 10 million, whichever is higher.

EUR-INR

Gross open position across all contracts shall not exceed 15% of the total open interest or EUR 50 million, whichever is higher.

Gross open position across all contracts shall not exceed 6% of the total open interest or EUR 5 million, whichever is higher.

GBP-INR

Gross open position across all contracts shall not exceed 15% of the total open interest or GBP 50 million, whichever is higher.

Gross open position across all contracts shall not exceed 6% of the total open interest or GBP 5 million, whichever is higher.

JPY-INR

Gross open position across all contracts shall not exceed 15% of the total open interest or JPY 2000 million, whichever is higher.

Gross open position across all contracts shall not exceed 6% of the total open interest or JPY 200 million, whichever is higher.

EUR-USD

Gross open position across all contracts shall not exceed 15% of the total open interest or EUR 100 million, whichever is higher.

Gross open position across all contracts shall not exceed 6% of the total open interest or EUR 10 million, whichever is higher.

GBP-USD

Gross open position across all contracts shall not exceed 15% of the total open interest or GBP 100 million, whichever is higher.

Gross open position across all contracts shall not exceed 6% of the total open interest or GBP 10 million, whichever is higher.

USD-JPY

Gross open position across all contracts shall not exceed 15% of the total open interest or USD 100 million, whichever is higher.

Gross open position across all contracts shall not exceed 6% of the total open interest or USD 10 million, whichever is higher.

Ø  In case of positions taken to hedge underlying exposure, the position limit linked to open interest shall be applicable at the time of opening a position. Such positions shall not be required to be unwound in the event a drop of total open interest in a currency pair at a stock exchange. However, participants shall not be allowed to increase their existing positions or create new positions in the currency pair till they comply with the position limits.

Ø  FPIs may take long or short positions without having to establish existence of underlying exposure, upto a single limit of USD 100 million equivalent, across all currency pairs involving INR, put together, and combined across all the stock exchanges.

Ø  FPIs shall ensure that their short positions at all stock exchanges across all contracts in FCY-INR pairs do not exceed USD 100 million.

Ø  To take long positions in excess of USD 100 million in all contracts in FCY-INR pairs, FPIs shall be required to have an underlying exposure in Indian debt or equity securities, including units of equity/debt mutual funds.

Ø  The Clearing Corporation shall provide details on the FPI’s day-end and day’s highest open positions at end of day to the custodians of the FPI.

Ø  The custodian of the FPI shall aggregate the positions taken by the FPI on the currency derivatives segments of all the stock exchanges and forward such details to the designated bank of the FPI. The custodian of securities of the FPI shall also provide the market value of applicable underlying exposure of the FPI to the designated bank of the FPI.

Ø  The onus of complying with the above provisions shall rest with the FPI and in case of any contravention, the FPI shall render itself liable to any action that may be warranted by RBI as per the provisions of Foreign Exchange Management Act, 1999 and Regulations, Directions, etc. framed thereunder. These limits shall be monitored by stock exchanges and/or clearing corporations and breaches, if any, shall be reported to RBI.  

The above-mentioned revised limits shall be applicable from December 02, 2019.

 

Members are requested to take note of above.

 

In case of any assistance/clarification, please do not hesitate to contact us. 

 

For and on behalf of Indian Clearing Corporation Ltd.

 

Piyush Chourasia

Chief Risk Officer & Head - Strategy

 

Risk Department

Email

risk.iccl@icclindia.com

Contact No:

+91-22-22728759/5820/8811