RBI sets up working group on hedging of commodity price risk

Reserve Bank has set up a working group to review the guidelines for hedging of commodity price risk by residents in the overseas market amid rising volumes of cross-border trade.
The working group, RBI today said, will review guidelines for hedging of commodity price risk by residents in overseas markets during the development phase of our domestic commodity derivative market.
The eight member group headed by RBI Executive Director Chandan Sinha will assess the risks faced by resident entities and their hedging requirements and also identify gaps in the existing regulatory framework in relation to the hedging requirements in relation to coverage of commodities, participants and products.

It will also suggest the broad principles for guiding the regulatory regime for overseas hedging of commodity risks in addition to recommending a modified framework for residents hedging commodity risk overseas.
The Working Group with members drawn from RBI, Sebi, commercial banks and corporate sector will submit its report by February 28.
The other members of the group are: T Rabi Sankar, Chief General Manager RBI; P K Bindlish, Chief General Manager Sebi; Venkat Nageshwar, Deputy Managing Director SBI; Ajit Ranade, Chief Economist Aditya Birla Group; Ashish Parthasarathy, Treasurer HDFC Bank; M G Gupta, Director-Finance MMTC; and Siddhartha Misra, Deputy General Manager RBI.