RBI has mandated traders to compulsorily have an underlying contracted exposure to foreign currency if they want to trade in the currency derivatives segment. The corresponding exchange circulars enforcing the RBI's instructions are linked below:
If a trader has an exposure greater than $100 million (i.e. notional contract value), they will be required to appoint a custodian participant or an authorised dealer. However, for traders with a smaller exposure, a declaration that they are trading currencies to hedge their contracted exposure will suffice.
How to submit the declaration at Zerodha
At Zerodha, when clients activate their currency segment on Console, they will have to submit the RBI declaration. The mobile number must be linked with Aadhaar to activate the segment online. To activate the currency segment, follow these steps:
- Login to Console.
- Click on Account.
- Click on Segment.
- Click on NSE - Currency Exchange and/or BSE - Currency Exchange.
- Click on Continue.
- Select the income range.
-
Click on
Choose file
and upload an income proof
1
or use the holdings statement as income proof.
- Accept the terms and conditions.
- Choose to receive the OTP on email or mobile and click on Continue.
- Enter the OTP and click on Verify.
- Click on Proceed then on Sign now.
- Enter the Aadhaar number and click on Send OTP.
-
Enter the OTP and click on
Verify & sign.
If your mobile number is not linked to Aadhaar, you can follow these steps:
- Print and sign the RBI declaration form (PDF).
-
Courier it along with an income proof
1
to:
Zerodha Customer Support Centre
192A 4th Floor,
Kalyani Vista, 3rd Main Road,
JP Nagar 4th Phase,
Bengaluru, 560076
To revoke the declaration, please create a ticket. The revocation will be done in 72 hours.
Note
1 Any of the below documents will suffice as income proof:
- Bank statement for the last 6 months with an average balance of more than ₹10,000. (Statement must be in the name of the Zerodha account holder.)
- The latest salary slip with gross monthly income exceeding ₹15,000.
- ITR acknowledgement with gross annual income exceeding ₹1,20,000.
- Form 16 with gross annual income exceeding ₹1,20,000.
- Certificate of net worth more than ₹10,00,000.
- Latest statement of demat holdings with current holdings value exceeding ₹10,000. (Your holdings must not be pledged)
- Latest Fixed Deposit (FD) receipt with a deposit amount exceeding ₹1,00,000.
RBI defines contracted exposure in the following way:
‘Contracted exposure’ means currency risk arising on account of current or capital account transactions permissible under the FEMA, 1999 or any rules or regulations made thereunder, that have been entered into.
To learn more, visit tradingqna.com/t/query-on-currency-derivatives-trading.
Things to keep in mind
- You must enable the segment on Console by 8 PM to trade in currencies the next trading day. If you are couriering the declaration, it can take up to 48 working hours for the segment to be enabled.
- Your equity segment must be active to enable the currency segment.
- You cannot enable currency and commodity segments at the same time. You must place separate requests.