The Securities and Exchange Board of India (SEBI) on Nov. 5 set the no-exposure threshold for rupee-derivative positions at $5 million, aligning exchange rules with a Reserve Bank of India (RBI) change.
The new figure replaces the $100 million equivalent limit in SEBI's March 2018 circular. The calculation aggregates notional value outstanding at a given time across rupee pairs and recognized exchanges. The same combined threshold applies across those pairs and venues.
SEBI sets a separate condition for foreign portfolio investors (FPIs): their short positions in foreign-currency/rupee contracts must stay at or below $5 million. An FPI with larger long positions must have qualifying exposure to Indian debt or equity securities. Eligible exposure includes units of equity and debt mutual funds.
Domestic clients may hold positions above $5 million if they meet conditions in the RBI's Master Direction on Risk Management and Inter-Bank Dealings, as amended, and RBI A.P. (DIR Series) Circular No. 25, dated Oct. 10, 2026.
The SEBI change follows the RBI's Oct. 10 reduction of the no-exposure threshold for exchange-traded rupee derivatives from $100 million to $5 million across recognized exchanges. The RBI said its measures responded to evolving conditions and were intended to support orderly foreign-exchange-market functioning and strengthen risk management.
SEBI also instructed exchanges and clearing corporations to prepare for implementation, revise related rules, notify brokers and clearing members, and report their progress to the regulator. The circular does not set a completion deadline.
