The Reserve Bank of India has decided to allow standalone primary dealers (SPDs) to offer all foreign exchange market-making facilities to users, as currently permitted to Category-I authorised dealers.

This is subject to adherence to the prudential regulations and other guidelines.

The central bank also decided to permit SPDs to take up trading and self-clearing membership with SEBI-approved stock exchanges/ clearing corporations for undertaking proprietary transactions in equity and equity derivatives market.

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The RBI, in its August 2022 Statement on Developmental and Regulatory Policies, said the move to expand scope of permitted activities for SPDs would give forex customers a broader spectrum of market-makers in managing their currency risk, thereby adding breadth to the forex market in India.

Wider market presence would improve the ability of SPDs to provide support to the primary issuance and secondary market activities in government securities, which would continue to be the major focus of primary dealer activities, it added.

Hitherto, SPDs were permitted to undertake foreign currency business for limited purposes.

Report to CCIL

The central bank also said that with effect from January 1, 2023, all financial transactions involving the rupee undertaken globally by related entities of the SPD will have to be reported to CCIL’s Trade Repository before 12:00 noon of the business day following the date of transaction.

There are seven SPDs, including ICICI Securities Primary Dealership, PNB Gilts, SBI DFHI and STCI Primary Dealer.

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