RBI Delays Currency Derivative Regulations to Curb Speculative Trading to May 3, 2024

Current Context: The Reserve Bank of India (RBI) has deferred the implementation of new rules for foreign exchange (FX) derivatives to May 3, 2024.

• The new regulations were initially slated to come into effect on April 3, 2024.
• The decision to postpone the implementation by a month was made in view of the feedback received from market participants and recent developments.
• The RBI had aimed to tighten the norms around currency derivatives trading to curb speculative activities in this market segment.
• This deferment would offer some short-term relief as market participants feared that the implementation of the new rules could dent trading volumes significantly in the segment.
• However, the RBI underscored that the regulatory framework for exchange-traded currency derivatives (ETCDs) has remained consistent over the years.
• It reiterated that there is no alteration in the RBI’s policy approach concerning ETCDs.

Question:

Q.1 What was the reason for deferring the implementation of the new rules for foreign exchange (FX) derivatives?
a. The rules were not ready.
b. The market participants requested more time.
c. The RBI decided to revise the rules.
d. The RBI wanted to curb speculative activities.