Brief Overview:
Mandatory reporting & clearing of OTC derivatives on listed IFSC securities proposed to supplement the exchange-traded derivatives market issued.
Proposal open for feedback till 5th August 2025.
Technical Details:
1) Covers contracts booked in IFSC, i.e. where derivatives contract is recorded on the books of a party whose relevant business location is in IFSC.
2) Permitted products:
(a) Credit Derivatives; and
(b) Equity Derivatives.
3) Underlying security to be either listed or traded on:
(a) IFSC recognised stock exchange (equity and bonds only); or
(b) Regulated foreign exchange.
4) No additional reporting requirements for FPIs.
5) Reporting of trades on the same day.
6) Central clearing proposed as mandatory to reduce risk, though bilateral clearing is open for discussion.
7) Independent position; no netting of OTC derivative vis-à-vis the underlying securities.
JC takeaway:
The proposal aims to complement the existing exchange-traded derivatives by allowing OTC derivatives on IFSC-listed equities, bonds, and select foreign securities. The framework introduces also mandatory reporting requirements to improve market surveillance and regulatory compliance.
For further details, please see:
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