Sebi ups banks' exposure limit to currency derivatives

Capital markets regulator Sebi today allowed bank stock brokers to have a greater exposure in the currency derivatives market, as compared to the limits permitted for the non-bank stock brokers.
The gross open position limit for all brokers currently stands at up to 15 per cent of the total open interest or USD 100 million, whichever is higher.
"However, for bank stock brokers, as authorised by RBI, the gross open position across all contracts shall not exceed 15 per cent of the total open interest or USD 1 billion, whichever is higher," Sebi said in a circular.
The move is aimed at maintaining orderly conditions in the domestic foreign exchange market and the decision is based based on the recommendation from RBI, Sebi said.

Reserve Bank would keep Sebi and the stock exchanges informed about the bank stock brokers that are authorised to have enhanced position limits.
In April last year, Sebi had raised the transaction limit in exchange traded currency derivatives to USD 15 million, from USD 10 million previously, for both foreign and domestic investors without having any underlying exposure.
Requirement of an underlying exposure had been placed to check speculation in the currency market.