Margin Requirements for Non-Centrally Cleared Derivatives

Derivatives are an integral risk management tool for business entities and financial institutions. However, derivatives markets can also lead to excessive and opaque risk taking which may result in systemic risk, especially so in context of Over the Counter (OTC) derivative markets. Based on these concerns, G20 called on the international standard setting bodies to reform the derivatives markets to ensure that systemic risk concerns arising from derivatives markets are contained. One of the important reform areas has been requirement of exchange of initial and variation margins for non-centrally cleared derivatives. This discussion paper introduces the proposals on implementation of margin requirements for non-centrally derivatives in India. After considering the comments/suggestions received, RBI will finalise requirements which will be implemented in a phased manner from September, 2016. [ RBI invites feedback/comments on the policy proposals contained in this document, especially on the specific questions raised in the paper. The feedback/comments on the policy proposals contained in this document, especially on the specific questions raised in the document, may be sent to the following address by June 3, 2016]. e-mail: mailto:otcmargin@rbi.org.in