The Reserve Bank of India (RBI) on Tuesday allowed standalone primary dealers to offer all foreign exchange market-making facilities to users, a move aimed at providing broader facilities to customers for currency risk management.
At present, Standalone Primary Dealers (SPDs) are permitted to undertake foreign currency business for limited purposes. Currently, there are seven SPDs and 14 bank primary dealers in the country.
SPDs will also be permitted to take up trading and self-clearing membership with Sebi-approved stock exchanges and clearing corporations for undertaking proprietary transactions in equity and equity derivatives market.
“…it has been 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…,” the RBI said in a circular.
In August, the RBI said the measure would give forex customers a broader spectrum of market-makers in managing their currency risk, thereby adding breadth to the forex market in India.
Wider market presence would improve the ability of SPDs to provide support to the primary issuance and secondary market activities in government securities, which would continue to be the major focus of primary dealer activities.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
