RBI permits cancellation and rebooking of foreign exchange derivative contracts by Authorised Dealers under revised guidelines. The move addresses client hedging needs amid volatile forex markets.
Revised Rules for Cancellation and Rebooking of FX Derivatives
In A.P. (DIR Series) Circular No. 25 dated October 10, 2026, the Reserve Bank of India updated the rules governing cancellation and rebooking—or rollover—of foreign exchange derivative contracts by Authorised Dealers. The changes come in response to evolving market dynamics and increased demand for operational flexibility in hedging arrangements.
The RBI now allows rebooking of cancelled forex derivative contracts provided the transaction is bona fide and supported by underlying exposure. Rollovers must be documented with justification for the change in tenor or amount, and ADs are required to conduct due diligence to prevent speculative misuse. This aligns with the principle that derivative instruments should serve genuine risk mitigation purposes.
Corporate counsel and compliance officers should review client forex hedging strategies to ensure adherence to the updated documentation and eligibility criteria. The amendment offers relief to importers and exporters facing cash flow mismatches but mandates stricter record-keeping by ADs.
Citations
- A.P. (DIR Series) Circular No. 25, October 10, 2026