Rupee transactions by SPD-related entities to be reported to CCIL’s trade repository from January 1: RBI

The Reserve Bank of India spelt out the prudential regulations that SPDs shall adhere to.

The Reserve Bank of India (RBI), on October 11, said that all rupee transactions undertaken by Standalone Primary Dealers (SPDs) and related entities shall be reported to Clearing Corporation of India Ltd’s (CCIL) trade repository.

The central bank added that all financial transactions must be reported by 12 noon of the business day following the date of transaction. The changes will be effective January 1, 2023.

On August 5, 2022, the central bank has decided to allow SPDs to offer all foreign exchange market-making facilities to users, as currently permitted to Category-I Authorised Dealers, subject to adherence to the prudential regulations and other guidelines to be issued separately in this regard.

SPDs shall comply with other regulations and prudential regulations issued by the central bank from time to time, it said.

In a separate notification, RBI spelt out the prudential regulations that SPDs shall adhere to.

The capital charge for market risk in foreign exchange exposures shall be higher of the charges worked out by the standardised approach and the internal risk management framework-based Value at Risk (VaR) model. Further, under the standardised approach, SPDs shall maintain a market risk capital charge of 15 percent for net open positions (limits or actual, whichever is higher) arising out of forex business with a risk weight of 100 percent.

The net open position for foreign exchange exposures shall be calculated as per the methodology to the extent applicable to SPDs. Capital charge for market risk shall be over and above the capital charge for credit risk of 15 percent as per directions, while the capital charge for market risk for all permissible non-core activities, including foreign exchange activities, shall not be more than 20 percent of the Net Owned Fund of the SPD as per last audited balance sheet.

SPDs shall continue to comply with the provisions of FEMA and all rules, regulations and directions issued thereunder.