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Our Bureau

Mumbai, Aug. 23 Banks and primary dealers will have to report all trades in the over-the-counter (OTC) interest rate derivatives market, starting from August 30.

The Reserve Bank of India today issued a circular asking banks to report their interest rate swap trades (IRS) and forward rate agreements (FRA) on the reporting platform, which has been developed by Clearing Corporation of India Ltd (CCIL).

This was one of the measures suggested by the RBI in the Annual Monetary Policy in April.

The RBI today said that all banks and primary dealers are required to report all their IRS and FRA trades on the reporting platform within 30 minutes from the deal time.

Client trades are not to be reported.

The reporting platform will bring transparency to the deals, offer mechanism for better price discovery and help disseminate information about IRS, said Dr G.C. Nath, Vice-President of CCIL.

“As of now, only 6-7 banks are active in this market. The reporting platform is likely to bring in more banks,” he added.

It is mainly foreign banks like Citibank, Deutsche Bank, HSBC and large private banks like ICICI Bank and HDFC Bank that are active in the IRS market. “Now there is hardly any information available as the deals are carried out on proprietary platforms and are not reported,” Dr Nath said.

Daily average volumes can be around Rs 10,000-14,000 crore and even go up to Rs 20,000 crore, Dr Nath said.

Banks and PDs will also have to ensure that details of all outstanding IRS and FRA contracts (excluding the client trades) are migrated to the reporting platform by September 15, the RBI said.

With a reporting system, dealers will get to know the rates on a real-time basis, said the head of treasury with a public sector bank.

“As of now the information comes with a lag. With CCIL’s system, we will get live rates and also get to know the volumes at the end of the day. This will bring transparency to the deals.”

More Stories on : Derivatives Markets | Interest Rates

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