{"id":254516,"date":"2021-09-21T15:30:31","date_gmt":"2021-09-21T10:00:31","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=254516"},"modified":"2021-09-21T14:41:04","modified_gmt":"2021-09-21T09:11:04","slug":"rbi-releases-master-direction-on-rbi-market-makers-in-otc-derivatives-directions-2021","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/09\/21\/rbi-releases-master-direction-on-rbi-market-makers-in-otc-derivatives-directions-2021\/","title":{"rendered":"RBI releases Master Direction on RBI (Market-makers in OTC Derivatives) Directions, 2021"},"content":{"rendered":"<p style=\"text-align: justify;\">The Reserve Bank of India has issued Master Direction on Reserve Bank of India (Market-makers in OTC Derivatives) Directions, 2021 vide notification dated September 16, 2021. These Directions shall be applicable to entities permitted to act as market-maker in OTC derivatives in terms of the Governing Directions. These directions shall come into force on January 03, 2022. The key points of the directions include:<\/p>\n<ul style=\"text-align: justify;\">\n<li>It constitutes a policy for the introduction of new OTC derivative products must comprise of the process for evaluation and approval of new products.<\/li>\n<li>The due diligence for the introduction of a new product must cover the following aspects of the product:<\/li>\n<\/ul>\n<ol style=\"text-align: justify;\">\n<li>Objective<\/li>\n<li>Type of targeted client and how the product addresses their need(s)<\/li>\n<li>All risks that a client would potentially face<\/li>\n<li>Pay-off profile<\/li>\n<li>Pricing<\/li>\n<li>Costs and fees, along with analysis of their components, to be incurred by a client; and<\/li>\n<li>Measures necessary to mitigate any conflict of interest<\/li>\n<\/ol>\n<ul style=\"text-align: justify;\">\n<li>The pricing of the product shall be on the basis of the following preferential hierarchy:<\/li>\n<\/ul>\n<ol style=\"text-align: justify;\">\n<li>Marking the product (or its components) to market<\/li>\n<li>Marking the product (or its components) to a model<\/li>\n<\/ol>\n<ul style=\"text-align: justify;\">\n<li>Market-makers shall deal only in derivative products permitted in terms of the Governing Directions, which have cash instrument(s) and\/or permitted derivative(s) as components.<\/li>\n<li>Market-makers shall not deal in derivative products containing a derivative instrument as underlying, unless specifically permitted in terms of the Governing Directions, either directly or on a back-to-back basis, which they cannot price independently.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">Access the RBI\u2019s Master Directions on Market-makers in OTC Derivatives, 2021, <a href=\"https:\/\/www.rbi.org.in\/Scripts\/NotificationUser.aspx?Id=12163&amp;Mode=0\">HERE<\/a><\/p>\n<hr \/>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">*Tanvi Singh, Editorial Assistant has reported this brief.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Reserve Bank of India has issued Master Direction on Reserve Bank of India (Market-makers in OTC Derivatives) Directions, 2021 vide notification <\/p>\n","protected":false},"author":121,"featured_media":253309,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,1193],"tags":[26354,47119,47118,2732],"class_list":["post-254516","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legislationupdates","category-notifications","tag-directions","tag-market","tag-otc-derivatives","tag-Reserve_Bank_of_India"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.4 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>RBI releases Master Direction on RBI (Market-makers in OTC Derivatives) Directions, 2021 | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2021\/09\/21\/rbi-releases-master-direction-on-rbi-market-makers-in-otc-derivatives-directions-2021\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"RBI releases Master Direction on RBI (Market-makers in OTC Derivatives) Directions, 2021\" \/>\n<meta property=\"og:description\" content=\"The Reserve Bank of India has issued Master Direction on Reserve Bank of India (Market-makers in OTC Derivatives) Directions, 2021 vide notification\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.scconline.com\/blog\/post\/2021\/09\/21\/rbi-releases-master-direction-on-rbi-market-makers-in-otc-derivatives-directions-2021\/\" \/>\n<meta property=\"og:site_name\" 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