Introduction of Credit Default Swaps for Corporate Bonds: Date for Operationalisation Changed

RBI/2011-12/228

IDMD.PCD.No. 12/14.03.04/2011-12

October 20, 2011

The Chairmen & Chief Executive Officers of all

Scheduled Commercial Banks (excluding RRBs),

Standalone Primary Dealers and Non Banking Financial Companies

Dear Sir/Madam,

Introduction of Credit Default Swaps (CDS) for Corporate Bonds: Change in effective date for operationalisation

A reference is invited to para 4 of the RBI circular of IDMD.PCD.No. 5053 /14.03.04/ 2010-11 dated May 23, 2011 wherein it was indicated that the guidelines on CDS would be effective from October 24, 2011. Necessary infrastructure which includes trade repository, documentation, publication of CDS curve for valuation, standardisation of contracts, etc. required for the launch of the product is being put in place. Further, market participants have asked for certain clarifications regarding documentation, operational aspects, and the arrangement for the necessary institutional framework.

2. In view of the above, the matter has been reviewed and it has been decided to operationalise CDS guidelines issued in May 2011 by the end of November 2011. The exact date will be notified shortly.

Yours faithfully,

(Sanjay Hansda)

Director & Officer-in-Charge