SEBI allows investors, FPIs to trade up to USD 5 million in rupee derivatives without underlying exposure

Mumbai (Maharashtra) [India], November 5 (ANI): The Securities and Exchange Board of India (SEBI) has revised currency derivatives trading limits, allowing domestic investors and foreign portfolio investors (FPIs) to trade up to USD 5 million in rupee-linked contracts without showing proof of underlying foreign currency exposure.
In a circular issued on Thursday, the market regulator said domestic clients and FPIs can take long or short positions in currency derivatives involving the Indian rupee (INR) within the prescribed limit across all recognised stock exchanges.
"Domestic clients and Foreign Portfolio Investors (FPIs) may take long or short positions in currency derivatives contracts involving INR, without having to establish the existence of underlying exposure, up to a single limit of USD 5 million equivalent of notional value (outstanding at any point), across all currency pairs involving INR, put together, and combined across all recognised stock exchanges," it said.
The regulator clarified that the USD 5 million limit applies to the combined outstanding positions across all currency pairs involving the rupee, rather than separately to each currency pair or exchange. For foreign portfolio investors, SEBI specified that their total short positions across all stock exchanges and foreign currency-rupee contracts must not exceed USD 5 million.
However, FPIs seeking to take long positions exceeding USD 5 million must have underlying exposure in Indian debt or equity securities, including investments in equity or debt mutual funds.
For domestic investors, positions exceeding USD 5 million will be permitted subject to the conditions prescribed under the Reserve Bank of India's (RBI) Master Direction on Risk Management and Inter-Bank Dealings, as amended, and its circular dated October 10, 2026.
As per the circular, the revisions follow changes introduced by the RBI in October regarding foreign exchange derivatives involving the Indian rupee. Apart from this, the market regulator has directed stock exchanges and clearing corporations to make necessary system and regulatory changes to implement the revised rules, inform stock brokers and clearing members, publish the provisions on their websites and report the implementation status to the regulator. (ANI)