The Reserve Bank of India (RBI) has introduced a draft circular proposing the implementation of a Unique Transaction Identifier (UTI) framework for over-the-counter (OTC) derivative transactions in India. The UTI is a globally recognized data element that will provide a uniform identification system for all transactions, enhancing transparency and regulatory oversight in the OTC derivatives market. The UTI will be used in addition to the Legal Entity Identifier (LEI), which identifies counterparties to a transaction, and will contain a maximum of 52 characters, starting with the LEI of the entity responsible for creating it.
The governing directions for OTC derivative transactions, as listed in the draft circular, include the Foreign Exchange Management Regulations, the Master Direction on Risk Management and Inter-Bank Dealings, the Rupee Interest Rate Derivatives Directions, the Forward Contracts in Government Securities Directions, and the Credit Derivatives Directions. The UTI will be generated by the Central Counterparty, Electronic Trading Platform, or Clearing Member, depending on the nature of the transaction, and will be mandatory for all OTC derivative transactions in India, including rupee interest rate derivatives, forward contracts in government securities, foreign currency derivatives, and credit derivatives.
The RBI has proposed that each OTC derivative transaction must have a UTI generated and reported in accordance with the CPMI-IOSCO Technical Guidance of February 2017. Modifications to derivative contract information will be treated as updates and will not require a new UTI, but lifecycle events such as novation will result in the generation of a new UTI. The RBI has invited comments and suggestions on the draft circular from banks, market participants, and other stakeholders by November 14, 2025, and the framework is set to take effect from April 1, 2026.
The introduction of the UTI framework is a significant step towards enhancing transparency and regulatory oversight in the OTC derivatives market in India. It will provide regulators with an aggregated view of global OTC derivatives exposures and enable more effective monitoring and supervision of the market. The RBI’s move is in line with global best practices and is expected to bring India’s OTC derivatives market in line with international standards. The draft circular is open for feedback, and stakeholders are encouraged to provide their comments and suggestions to help shape the final framework. Overall, the implementation of the UTI framework is a positive development for the Indian financial markets and is expected to promote greater transparency and stability in the OTC derivatives market.