CCIL to guarantee OTC forex trades

CCIL to guarantee OTC forex trades

Mumbai: The Clearing Corporation of India Ltd (CCIL), the agency that clears cash market transactions for bonds and currency, on Wednesday said that it has started guaranteeing over-the-counter (OTC) foreign exchange trades as soon as each transaction becomes effective. Until now, there was no third-party guarantor for such trades.

“CCIL now becomes the first central counterparty in the world to offer clearing and settlement of forward trades in forex markets," the agency said in a statement.

In India, OTC or non-exchange traded derivatives include mainly the interest rate swaps (IRS) in the domestic currency markets, and forwards and options in the foreign exchange markets.

As on date, the outstanding amount in the foreign exchange forward market in India is about $450 billion, and nearly Rs17,00,000 crore in the rupee IRS market, according to data available with CCIL.

The agency said that the guarantee on IRS trades is on the cards and expected to be launched soon.