RBI defers UTI framework for OTC derivative transactions to January 2027

The RBI has postponed the implementation of the UTI framework for OTC derivatives to 1 January 2027, extending timelines for reporting and allowing markets more operational flexibility

The Reserve Bank of India has deferred the implementation of the Unique Transaction Identifier (UTI) framework for over-the-counter (OTC) derivative transactions to 1 January 2027, following industry feedback, the central bank said in a release on Wednesday.

 

The central bank had earlier proposed to implement UTI for all transactions in OTC markets from 1 April 2026, covering rupee interest rate derivatives, forward contracts in government securities, foreign currency derivatives, foreign currency interest rate derivatives and credit derivatives.

 

In its final directions, the RBI said the rollout timeline has been extended from the earlier proposed date to provide market participants sufficient time to build the necessary technical capabilities after the issuance of revised reporting formats and operating guidelines.

 

Further, the RBI clarified that the directions will apply only to OTC derivative transactions entered into on or after the date the framework comes into effect. Outstanding contracts prior to the implementation date will not be required to obtain a UTI.

 

On the issue of UTI generation, the RBI retained the proposed “waterfall” mechanism that sets out the order of entities responsible for generating the identifier. While some stakeholders had suggested mandating electronic trading platforms (ETPs) to generate UTIs, the regulator declined to prescribe a single entity.

 

In line with global standards, the RBI said the mandate is for generation and reporting of the UTI, while providing flexibility regarding which entity generates it, based on the prescribed hierarchy or mutual agreement between counterparties. However, delegation of UTI generation to a vendor, where the Legal Entity Identifier embedded in the UTI would be that of the vendor, will not be permitted.

 

For transactions reportable in multiple jurisdictions where there is no earlier foreign reporting deadline, the RBI has clarified that the UTI-generating entity may be mutually agreed upon by counterparties. A similar provision has also been introduced for trades reportable only in India, offering operational flexibility.

 

Meanwhile, the RBI has extended the timeline for submission of the final UTI in cases where it is not available at the time of reporting. Market participants will now have five business days from the date of the transaction to report the UTI, instead of the earlier proposed two business days.

 

Additionally, a provision has been introduced allowing the reporting counterparty to generate and report a temporary UTI to the trade repository if the final UTI is not available from the counterparty at the time of reporting.

 

The directions maintain that modifications to contract details will be treated as updates and will not require generation of a new UTI. However, lifecycle events such as novation resulting in a new reportable derivative contract will necessitate a fresh identifier.

 

The Clearing Corporation of India Limited (CCIL) will issue revised reporting formats and detailed operating guidelines for reporting OTC derivative transactions with UTIs. The RBI said queries and requests for further clarifications received from market participants have been shared with CCIL for suitable incorporation in the formats and guidelines.