Foreign Banks to Seek Relief From India's Derivatives Rule
- Global firms warn of stock market volatility if rule applied
- SEBI banned most indirect offshore holdings on Friday
A man looks up at an electronic ticker board that indicates stock figures at the Bombay Stock Exchange in Mumbai
Photographer: Dhiraj Singh/BloombergOverseas banks met with India’s markets regulator to ask for relief from a new rule that requires investors to liquidate some of their offshore derivatives contracts, people with knowledge of the matter said.
The Securities and Exchange Board of India issued a circular on Friday that said the derivatives must be liquidated by the end of 2020 or by the instrument’s date of maturity, whichever is earliest. Banks, representing their clients, met with SEBI officials on Monday to ask for a three-month extension to roll over their July positions. The contracts usually have monthly maturity, meaning existing products will have to be rolled over by the end of this month or be liquidated upon expiration. Liquidating all the contracts at once will create huge volatility in stocks, the banks said, according to the people.