The Commodity and Capital Market Participants Association of India (CPAI) is working with the Industry Standards Forum (ISF), a body comprising members of various industry associations, to create a separate framework that would distinguish between liquidity providers and speculators. That they believe would help them to convince the Reserve Bank of India (RBI) to permit lower margin for the bank guarantees and enable them to trade higher volumes.
The RBI has mandated that banks lending to capital market intermediaries (CMIs) extend guarantees for proprietary trading subject to the facility being fully secured. The proposal says that banks can extend guarantee only to the amount equal to the value of the collateral provided by the proprietary trading firm.
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