RBI has prohibited authorised dealers from allowing clients to rebook cancelled foreign exchange derivative contracts involving INR. The measure, effective immediately, aims to curb speculative activity and ensure orderly forex market conditions.
RBI Cracks Down on Forex Derivatives Rebooking
The Reserve Bank of India has issued fresh regulatory directions prohibiting authorised dealers (ADs) from permitting clients to rebook any cancelled foreign exchange derivative contracts involving the Indian Rupee. The restriction is detailed in A.P. (DIR Series) Circular No. 25, issued on October 11, 2026, as part of broader measures to maintain orderly conditions in the foreign exchange market.
The ban applies to all foreign exchange derivative contracts settled in INR. The RBI’s move targets speculative behaviour where participants cancel and immediately re-enter similar positions to exploit fleeting price movements. By disallowing rebooking, the regulator aims to enhance market integrity and reduce artificial volatility.
Corporate legal teams and financial institutions must update their forex risk management protocols to ensure compliance. The prohibition necessitates stricter internal controls over derivative transactions and heightened client advisories. This tightening reflects the RBI’s increasing focus on curbing arbitrage and speculative forex trading, which may foreshadow further scrutiny of derivative market practices.