New Delhi: The Reserve Bank of India (RBI) has released a draft circular proposing the mandatory implementation of a Unique Transaction Identifier (UTI) for all Over-the-Counter (OTC) transactions involving rupee interest rate and foreign currency derivatives starting from the next financial year, April 1, 2026. This move is aimed at enhancing transparency, monitoring, and regulatory oversight of the OTC derivatives market in India.
What is UTI and Why is it Important?
UTI is a unique reference code assigned to each OTC derivative transaction throughout its lifecycle. It consists of a maximum of 52 characters, including the Legal Entity Identifier (LEI) of the generating entity, followed by a unique transaction identifier. While the LEI identifies the parties involved in a transaction, the UTI serves as a single unique reference number for the entire transaction.
By mandating UTIs, RBI aims to facilitate a comprehensive and aggregated view of OTC derivative transactions, enabling better market surveillance and risk management. The UTI is recognized globally as a critical data element for regulatory reporting of OTC derivatives.
Scope of Implementation
According to the draft circular, the UTI requirement will apply to all OTC market transactions involving:
- Rupee interest rate derivatives
- Forward contracts in Government securities
- Foreign currency derivatives
- Foreign currency interest rate derivatives
- Credit derivatives
Global Context and Compliance
The use of UTIs has been widely adopted or is under implementation in major financial jurisdictions worldwide. India has already implemented the LEI system, and the introduction of UTIs will further align Indian regulatory practices with global standards.
Next Steps and Stakeholder Involvement
RBI has invited feedback from banks, market participants, and other stakeholders on the draft circular. Comments are to be submitted by November 14, 2025. The central bank emphasized that market participants must put in place necessary measures to ensure compliance once the mandate is finalized.
Enhancing Market Transparency
The proposed framework will strengthen the RBI’s ability to monitor the complex OTC derivatives market and help policymakers in making informed decisions, ultimately contributing to the stability and integrity of India’s financial system.
About RBI
The Reserve Bank of India is the nation’s central banking institution, regulating monetary policy and financial markets to maintain economic stability and growth. The RBI oversees the banking sector, currency issuance, and the regulation of financial markets, including derivatives trading.
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