RBI Allows Resident Entities to Hedge Their Exposures to Gold Price Risk Using OTC Derivatives in IFSCs

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OTC Derivatives in IFSCs

Circular No. RBI/2024-25/17 A. P. (DIR Series) Circular No. 01; Dated: 15.04.2024

Earlier, resident entities were permitted to hedge their exposure to the price risk of gold on exchanges in the IFSC recognised by the IFSCA. To provide flexibility to resident entities for hedging their gold price risk exposures, the RBI has now decided to permit resident entities to hedge these exposures using OTC derivatives in IFSC, in addition to derivatives traded on exchanges in IFSC.

This is subject to certain stipulations set out in master directions on ‘Hedging of Commodity Price Risk and Freight Risk in Overseas Markets’. These instructions shall apply with immediate effect.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied