RBI Governor Shaktikanta Das said that standalone primary dealers (SPDs) have played an important role in the development of financial markets in India. It is proposed to enable SPDs to offer all foreign exchange market-making facilities as currently permitted to category-I authorised dealers, subject to prudential guidelines.
This measure will provide customers with a wider set of market makers to manage their foreign currency risk. This will also increase the breadth of the forex market in India, Das said while announcing the upward revision in the benchmark policy rates on Friday.
SPDs will be permitted to undertake transactions in the offshore rupee overnight indexed swap (OIS) market with non-residents and other market makers. This measure will supplement a similar measure announced in February this year for the banks. These measures are expected to remove the segmentation between onshore and offshore OIS markets and improve price discovery.
A draft master direction on managing risks and code of conduct in outsourcing of financial services will be issued shortly for comments from stakeholders.