The Reserve Bank of India (RBI) on February 10, 2022 has issued Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2022. This has come into force on May 9, 2022.
The following directions has been stated namely: -
• Eligible participants - The following persons shall be eligible to participate in credit derivatives market:
1. Residents
2. Non-residents, who are eligible to invest in corporate bonds and debentures.
• Protection buyers and sellers for Credit Default Swaps in OTC market - Retail users shall be allowed to buy protection only for the purpose of hedging
• Reference Entities and Obligations for Credit Default Swaps in OTC market - The reference entity in a CDS contract shall be a resident entity who is eligible to issue any of the debt instruments
• Directions for exchanges - Exchanges may offer standardised single-name CDS contracts with guaranteed settlement.
[Notification No. FMRD.DIRD.11/14.03.004/2021-22]
