RBI issues draft norms on credit default swaps for bonds
Published on Wed, Aug 04, 2010 at 22:38 | Source : CNBC-TV18
Updated at Thu, Aug 05, 2010 at 13:56
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RBI issues draft norms on credit default swaps for bonds
The Reserve Bank of India (RBI) has announced draft rules for these instruments. These swaps can be written only on corporate bonds issued by rated Indian entities.
The much-feared credit default swaps, which are seen as the reason for the subprime crisis, could be making their entry into India very soon. The Reserve Bank of India (RBI) has announced draft rules for these instruments. These swaps can be written only on corporate bonds issued by rated Indian entities.
The RBI has also recommended that swaps may be written on bonds issued by special purpose vehicles of rated infrastructure companies. The draft norms also say that these swaps be clubbed with other exposure, and a centralised repository with a reporting platform be set up for trading in them.
Non-guaranteed settlement may be allowed at the first stage while the final stage will have guaranteed settlement and central counterparty.
