The Reserve Bank of India (RBI) on Thursday deferred the implementation of its new norms for exchange traded currency derivatives (ETCD) market to May 3 from April 5. This comes after market participants raised concerns over participation in the ETCD market and the run up to the April 5 deadline saw a sharp rise in volatility in the forex market.“In view of feedback received and recent developments, it has been decided that these directions (on ETCD) will now come into effect from Friday May 3, 2024,” the RBI said in a release. It, however, emphasised that the regulatory framework for ETCDs has remained consistent over the years and that there has been no change in the policy approach.

In January this year, the RBI released a new framework for hedging of foreign exchange risks, which was to be implemented from April 5, 2024. The new norm allowed users to take positions (long or short) in foreign exchange derivatives market, without having to establish existence of underlying exposure, up to a single limit of $100 million equivalent across all currency pairs involving the rupee, put together, and combined across all recognised stock exchanges.