RBI mulls transparent foreign exchange trading platform

Mumbai: The Reserve Bank is contemplating a transparent foreign exchange trading platform with a view to encouraging retail participation, saying it would lead to better price discovery.

"The Clearing Corporation of India Limited (CCIL) will develop access to its platform FX-CLEAR through an internet- based application. A discussion paper on the proposal will be issued by end-October 2017 for public comments," said a statement on developmental and regulatory policies by the Reserve Bank of India.

It observed that the issue of transparent and fair pricing for retail users including Micro, Small and Medium Enterprises in the foreign exchange market has been raised in various fora.

"A mechanism is proposed for improving the pricing outcome for the retail user to be defined in terms of transaction size under which client pricing is directly determined in the market by providing customers with access to an inter-bank electronic trading platform where offers from clients and banks can be matched anonymously and automatically," it said.

Such a mechanism will provide transparency while enhancing competition and lead to better pricing for customers, it said.

The statement further said that a High-level Task Force on Public Credit Registry (PCR) for India has been constituted under the chairmanship of Y M Deosthalee, former CMD of L&T Finance Holdings.

It will review the current availability of information on credit, the adequacy of existing information utilities, and identify gaps that could be filled by a Registry.

The Task Force is expected to submit its report by April 4.

RBI has also decided to make it mandatory for corporate borrowers having aggregate loan exposure of Rs 5 crore and above from any bank to obtain Legal Entity Identifier (LEI) registration and capture the same in the Central Repository of Information on Large Credits (CRILC).

This will facilitate assessment of aggregate borrowing by corporate groups, and monitoring of the financial profile of an entity or group, it said.

"This requirement will be implemented in a calibrated, but time-bound manner. Necessary instructions will be issued by end-October 2017," it said.