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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

SEBI issues circular regarding Revision of limits relating to requirement of underlying exposure for currency derivatives contracts

05-Nov-2026 | HO/(561)2026-MRD-POD2/ I/25177/2026

SEBI has issued circular regarding Revision of limits relating to requirement of underlying exposure for currency derivatives contracts Through this circular, SEBI has amended its Master Circular on currency derivatives following RBI's revised framework on foreign exchange derivatives involving the Indian Rupee (INR). Under the revised rules, domestic clients and Foreign Portfolio Investors (FPIs) can take positions in INR-based currency derivative contracts without demonstrating an underlying exposure up to an aggregate limit of USD 5 million across all recognised stock exchanges. Further, for positions exceeding USD 5 million, additional conditions apply. FPIs taking long positions beyond this limit must have investments in Indian debt or equity securities, while domestic clients must comply with the exposure and documentation requirements prescribed by RBI. RBI has also introduced requirements relating to the cancellation and rebooking of forex derivative contracts and maintenance of supporting documentation for hedging exposures. Stock exchanges and clearing corporations have been directed to update their systems and regulations, inform market participants of the revised requirements, and report the implementation status to SEBI. For more information, please refer the attached pdf.

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