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RBI Funding Curbs Deal ‘Body Blow’ to Indian Prop Trading Firms
Key Points
RBI Funding Curbs Deal ‘Body Blow’ to Indian Prop Trading Firms India’s proprietary trading firms and stock brokers are bracing for a major overhaul of how they finance trading activity. Starting July 1, the Reserve Bank of India will require bank guarantees issued to firms trading in capital markets to be fully backed by collateral, with at least half in cash. While the move reduces risk for lenders, it is expected to curb leverage among local trading firms, raise funding costs and limit...
RBI Funding Curbs Deal ‘Body Blow’ to Indian Prop Trading Firms
India’s proprietary trading firms and stock brokers are bracing for a major overhaul of how they finance trading activity.
Starting July 1, the Reserve Bank of India will require bank guarantees issued to firms trading in capital markets to be fully backed by collateral, with at least half in cash. While the move reduces risk for lenders, it is expected to curb leverage among local trading firms, raise funding costs and limit their capacity to execute deals.