RBI proposes to allow exporters, importers to Write Covered Options
Updated: Jun 26, 2015 04:28:56pm
Mumbai, June 26 (KNN) The Reserve Bank of India (RBI) has proposed to allow the exporters and importers to write covered options against their actual contracted export or import exposure.
Under the current regulatory framework, writing of options by the users on a standalone basis is not permitted.
However, end-users can enter into option strategies of simultaneous buying and selling of plain vanilla European options, provided there is no net receipt of premium.
"...in order to encourage participation in the Over the Counter (OTC) currency options market and improve its liquidity, it has now been decided to permit resident exporters and importers of goods and services to write (sell) standalone plain vanilla European call or put options only against their actual contracted export or import exposures, i.e. covered call or covered put, respectively," the RBI's draft guidelines said.
Comments on the draft guidelines on 'Writing of Covered Options' have been sought by July 10.
The RBI said covered options against a related contracted exposure will add to the liquidity of the options segment in the over-the-counter market. (KNN Bureau)
Under the current regulatory framework, writing of options by the users on a standalone basis is not permitted.
However, end-users can enter into option strategies of simultaneous buying and selling of plain vanilla European options, provided there is no net receipt of premium.
"...in order to encourage participation in the Over the Counter (OTC) currency options market and improve its liquidity, it has now been decided to permit resident exporters and importers of goods and services to write (sell) standalone plain vanilla European call or put options only against their actual contracted export or import exposures, i.e. covered call or covered put, respectively," the RBI's draft guidelines said.
Comments on the draft guidelines on 'Writing of Covered Options' have been sought by July 10.
The RBI said covered options against a related contracted exposure will add to the liquidity of the options segment in the over-the-counter market. (KNN Bureau)
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