RBI / 2011-12/287
IDMD.PCD.No.  2301/14.03.04/2011‐12

November 30, 2011

All Standalone Primary Dealers

Dear Sir/Madam,

Guidelines on Capital Adequacy and Exposure Norms for Credit Default Swaps (CDS)

Please refer to the guidelines on Credit Default Swaps on corporate bonds issued vide Circular IDMD.PCD.No. 5053 / 14.03.04 / 2010-11 dated May 23, 2011.  As indicated in paragraph 3.5 of the circular, market participants will have to follow the capital adequacy guidelines for CDS issued by their respective regulators. Accordingly, guidelines on capital adequacy and exposure norms to standalone Primary Dealers (PDs) undertaking CDS transactions are enclosed as Annex.

2.         These guidelines become effective from December 1, 2011.

Yours faithfully,

(K.K. Vohra)
Chief General Manager