RBI Amends Its Comprehensive Guidelines on Derivatives

RBI issued modifications to its comprehensive guidelines on derivatives, with respect to the stand-alone plain vanilla forex options. The instructions with regard to user suitability and appropriateness, as outlined in paragraph 8.3 of the circular DBOD No.BP.BC.44/21.04.157/2011 dated November 02, 2011, have been reviewed. The guidelines in paragraph 8.3 are applicable to all generic and structured derivative products, except forex forward contracts. It has been decided that stand-alone plain vanilla forex options (without attached structures) purchased by clients will be exempt from the user suitability and appropriateness norms, and the regulatory requirements will be at par with the forex forward contracts.