Offshore posting for Onshore Transactions permitted
Brief Overview:
Finally, a sigh of relief to market participants as RBI allows offshore posting of margin for onshore derivative exposures of interbank trades.
This has been introduced by amendments to the FEMA (Margin for Derivative Contracts) Regulations, 2020.
Technical Details:
The new changes introduced are:
For interbank trades, posting/collecting margin outside India for onshore Indian trades where one of the AD Banks is a branch of foreign bank is now permitted.
While there was clarity on posting of margin in/outside India for cross border trades, the amendment now specifically captures posting/collecting of margin in and outside India for trades by IBUs.
In both cases margin can be exchanged by AD bank OR overseas branches OR Head office. Thereby recognising global CSA for onshore trades.
JC takeaway:
This amendment definitely results in ease of doing business, especially for the foreign banks.
This is a result of continuous advocacy by ISDA, market participants and of course, Juris Corp!
One less hurdle for exchanging IM!?
For further details, please see:
Amendment to the FEMA (Margin for Derivative Contracts)- 2024
For any queries/clarifications, please feel free to ping us and we will be happy to chat:
