With an aim to prevent misuse of price-sensitive information by participants in markets, the Reserve Bank of India (RBI) has come out with guidelines for financial instruments. The guidelines have become effective from March 16, 2019. The RBI stated that market participants, either acting independently or in collusion, shall not undertake any action with the intention to manipulate the calculation of a benchmark rate or a reference rate.
The RBI also said that no market participant would carry out a transaction or initiate any action with the sole or dominant intention of influencing a benchmark rate or a reference rate. Further, about regulatory action on market abuse, it said market participants indulging in any such activity are liable to be denied access to markets in one or more instruments for a period that may not exceed one month at a time.
Besides, it added that these directions would exclude transactions executed through the recognised stock exchanges. The directions would not apply to banks and the central government in furtherance of monetary policy, fiscal policy or other public policy objectives.
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