Das for greater participation of banks in ~ derivatives mkt

Banks should focus on bolstering the participation of Indian entities in the rupee derivatives markets, both domestically and internationally, while maintaining a prudent approach, said Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday.

He said despite some progress, the involvement of domestic banks in the derivative markets remained constrained, with only a limited number of active market-makers.

Das said while Indian banks are gradually increasing their presence in the global markets, their footprint remains relatively small.

Currently, domestic banks predominantly interact with global market-makers rather than end-clients, and they are yet to establish themselves as significant marketmakers globally. Speaking at the FIMMDA-PDAI Annual Conference on Monday, he said, “Participation of domestic banks in derivative markets remains limited with only a small set of active marketmakers. Participation of Indian banks in global markets is growing but it is quite small."

“Going forward, our focus should be on enhancing and widening the participation of Indian players in markets for rupee derivatives, both domestically and offshore, while being prudent,” Das said. He further said that the journey towards pricing transparency is ongoing, with room for further improvement.

Retail customers still do not receive deals comparable to those offered to larger clients. Effective market-making and precise pricing for smaller transactions on the negotiated dealing systemorder matching segment (NDS- OM) (a platform for trading) are essential.

Disparities in pricing between small and large customers in forex (FX) markets exceed what operational factors alone can justify.

“GOING FORWARD, OUR FOCUS SHOULD BE ON ENHANCING AND WIDENING THE PARTICIPATION OF INDIAN PLAYERS IN MARKETS FOR RUPEE DERIVATIVES, BOTH DOMESTICALLY AND OFFSHORE, WHILE BEING PRUDENT”

SHAKTIKANTA DAS

RBI Governor