Annual Policy Statement for the Year 2010-11- 20th April 2010
Part B. Development and Regulatory Policies
III. Financial Markets
Financial Market Infrastructure
Reporting Platform for Certificates of Deposit (CDs) and Commercial Papers (CPs)
69. Although there is a large CD and CP market, there is currently little transparency in the secondary market trades. In order to promote transparency in the secondary market transactions for CDs and CPs, it is proposed:
to introduce a reporting platform for all secondary market transactions in CDs and CPs.
70. FIMMDA has been requested to start work on developing a platform similar to its existing platform for corporate bonds. Eventually, once the reporting system stabilises, a settlement mechanism similar to the one introduced for the OTC corporate bonds may be put in place.
Reporting of OTC Derivative Transactions
71. The issue of transparency and the need for information repositories for transactions in OTC derivatives have assumed sharper focus in the post-crisis scenario. In India, centralised reporting of OTC trades in interest rate derivatives [interest rate swap (IRS)/forward rate agreements (FRAs)] commenced in August 2007 on the Clearing Corporation of India Limited (CCIL) platform. To capture the trade data pertaining to all OTC derivative transactions for regulation, surveillance and transparency purposes, it is necessary to extend the existing reporting arrangement in respect of IRS to all OTC interest rate and forex derivatives. Accordingly, it is proposed:
to set up a Working Group consisting of members of the Reserve Bank, the CCIL and market participants to work out the modalities for an efficient, single point reporting mechanism for all OTC interest rate and forex derivative transactions.
Revision of Repo Accounting: Status
72. As indicated in the Annual Policy Statement of April 2009, the revised guidelines for accounting of repo/reverse repo transactions were issued by the Reserve Bank on March 23, 2010. The revised accounting guidelines capture the economic essence of repo as a collateralised lending and borrowing instrument and not as outright sale and purchase. The revised accounting guidelines have been made applicable to market repo transactions with effect from April 1, 2010. These accounting norms will, however, not apply to repo/reverse repo transactions conducted under the Liquidity Adjustment Facility (LAF) with the Reserve Bank.
>> GO TO PAGE 2
>> GO TO PAGE 1
Click Here For Highlights of Annual Policy Statement for the Year 2010-11
Click Here For Macro economic and Monetary Developments : 2009-10