Appendix 6: Circular Issued with Relation to Suitability and Appropriateness of Derivative Transactions*

ANNEX

6. Broad Principles for Undertaking Derivative Transactions by Market-makers

6.1 In addition to generic derivative products, market-makers may also offer structured derivative products to users as long as they do not contain any derivative instrument as underlying and have been specifically permitted by the RBI. For the purpose of the guidelines contained in this circular†,

  1. The following derivative instruments used to hedge an existing interest rate and forex exposure, on a standalone basis, may be treated as generic derivative products:
    • Forex Forward Contracts
    • Forward Rate Agreements
    • Interest rate caps and floors (plain vanilla only) ...

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