Core Viewpoint - The Reserve Bank of India (RBI) is implementing measures to enhance transparency in the over-the-counter (OTC) markets for foreign exchange, interest rate, and credit derivatives, particularly focusing on rupee derivative transactions [1][8]. Group 1: Transparency Measures - All transactions in OTC derivatives are required to be reported to the trade repository of the Clearing Corporation of India Limited (CCIL) by market-makers [1]. - A significant number of offshore rupee derivative transactions remain unreported, leading to non-transparency in the market [2]. - Standalone primary dealers were mandated to report all rupee derivative transactions conducted globally by their related parties starting in October 2022 [2]. Group 2: Future Reporting Requirements - Banks in India will be required to report all rupee interest rate derivative transactions undertaken globally by their related parties by December 2025 [3]. - It is proposed that all Authorised Dealer Category-I banks report foreign exchange derivative transactions involving INR conducted by their related parties globally [6]. - The reporting will include essential transaction details such as notional value, counterparty name, maturity date, and currency specifications to provide meaningful information [7]. Group 3: Stakeholder Engagement - The RBI has invited comments on the draft directions from market participants, stakeholders, and other interested parties by March 9 [8].

Core Insights - The 2025 Triennial Central Bank Survey indicates a significant increase in trading activity in FX and OTC interest rate derivatives markets, with FX trading reaching $9.6 trillion per day, up 28% from 2022, and OTC interest rate derivatives increasing 59% to $7.9 trillion daily [1][2]. FX Market Overview - The US dollar remains the most-traded currency, involved in 89% of all FX trades, followed by the euro at 28.9% and the Japanese yen at 16.8%. The share of sterling decreased to 10.2% [3]. - FX swaps are the most traded instrument, with average daily turnover rising to $4 trillion, a 5% increase from April 2022. FX spot trading increased by 42%, while outright forwards rose by 60%, with their shares in global turnover reaching 31% and 19% respectively [3]. OTC Interest Rate Derivatives - Average daily turnover of euro-denominated contracts nearly doubled to $3.0 trillion, accounting for 38% of the global total, while US dollar contracts increased by 7% to $2.4 trillion, leading to a decline in the international share of US dollar contracts to 31% [4]. - In contrast, the market for exchange-traded derivatives shows US dollar contracts holding 65% of global turnover, with significant increases in turnover for sterling and Japanese yen derivatives, surging by 179% and 684% respectively [5]. Trading Centers - FX trading remains concentrated in major financial centers, with the UK, US, Singapore, and Hong Kong SAR accounting for 75% of overall foreign exchange trading [5]. - The UK is the most important FX trading location, maintaining a 38% share of total turnover, while for interest rate derivatives, the UK and US together hold 73% of the market [6][7].