Source: BL
Context:
The Reserve Bank of India (RBI) has mandated the use of a Unique Transaction Identifier (UTI) for all Over-the-Counter (OTC) derivative transactions.
What is a UTI?
- A Unique Transaction Identifier (UTI) is a globally recognised data element used to uniquely identify each OTC derivative transaction.
- Helps in accurate reporting and monitoring of derivative trades.
Purpose of mandating UTI
- Enables policymakers and regulators to obtain a comprehensive and transparent view of the OTC derivatives market.
- Improves:
- Risk monitoring
- Market surveillance
- Data consistency
- Financial stability oversight
UTI will now be mandatory for all these transactions.
OTC (Over-the-Counter) derivatives
OTC (Over-the-Counter) derivatives are financial contracts that are traded directly between two parties, without going through a formal stock exchange. They are privately negotiated contracts.
