Answer: Permitted purpose depends on the currency pair viz. Foreign Currency - Indian Rupee (FCY-INR) and Foreign Currency - Foreign Currency (FCY-FCY).

• Permitted purpose for undertaking FCY-INR forex derivative transactions (e.g., USD-INR forwards, futures, options, etc.): Hedging exchange rate risk.

• Permitted purpose for undertaking FCY-FCY forex derivative transactions (e.g., EUR-USD forwards, futures, options, etc.): No restrictions in terms of purpose.

Answer:

• OTC derivatives

• For retail users
  • Foreign Exchange Forward
  • Foreign Exchange Swap
  • Currency Swap
  • Purchase of Call and Put Options
  • Purchase of Call and Put Spreads
• For non-retail users: All foreign exchange products permitted to be offered to retail users, covered options, option to undertake / cancel a foreign exchange forward / foreign exchange swap / currency swap / foreign exchange option and any other foreign exchange derivative contract including derivatives having cash instrument(s) and/or permitted derivative(s) as components, but excluding leveraged derivatives and derivatives containing a derivative instrument as underlying other than those specifically permitted.

• Exchange traded derivatives

• Foreign Exchange Future

• Foreign Exchange Option

Answer: Regulated financial entities, other entities with a minimum net worth of Rs.500 crore or a minimum turnover of Rs. 1000 crore, as per the latest audited financial statements, and non-residents (other than individuals) are classified as non-retail users. All other types of users are classified as retail users.

Answer: Forex derivatives traded on exchanges are referred to as exchange traded forex derivatives. All other forex derivatives, including those traded on ETPs, are called OTC forex derivatives.