India’s new venue-based FX dealing systems set to launch on April 6


India is preparing to invoke a new version of its national venue-based foreign exchange dealing systems, namely FX-Clear and FX-Swap platforms, which will operate with the Clearing Corporation of India (CCIL) as counter-party from the point of trade, concluded in the order matching mode.

Going live on April 6 this year, the system will operate in tandem with the payment versus payment in the dollar/rupee settlement segment. This will allow members to trade on the platforms without any bilateral limits with various counter-parties.

FX-Clear is a forex dealing system, which was launched on August 7, 2003, offering both order matching and negotiation modes for dealing. The FX-Swap dealing system is an anonymous dealing system where the identity of the original counter-parties to a trade shall be disclosed only on a post-trade basis.

“Now banks will not be required to have bilateral exposure limits with other banks with whom they are trading. Previously banks were required to have exposure limits with whom they were trading and for these exposure limits, banks had to keep capital too,” said a senior treasury official in an interview with Business Insider.

Exposure limits are the limits to which one can do transactions with other banks and in this case it is dollar/rupee transactions. The new version has been made available for dollar/rupee because among all foreign currencies, most transactions are in dollar/rupee. The dollar/rupee trades constitute about 85 per cent of the total forex transactions in India in terms of value. The move will benefit the member banks who trade with CCIL.

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India's new venue-based FX dealing systems set to launch on April 6

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