The Reserve Bank of India (“RBI”) has operationalised the Unique Transaction Identifier framework through a circular titled “Unique Transaction Identifier for OTC Derivative Transactions”, issued under section 45W of the Reserve Bank of India Act, 1934, on February 18th, 2026, with directions annexed, which shall come into effect on January 1st, 2027 and be applicable to all over-the-counter derivative transactions entered into on and after January 1st, 2027 (“RBI UTI Directions”).

I. Background

Over-the-counter (“OTC”) derivatives form a major component of the Indian derivatives market and are widely used for risk management, hedging and investment. These products include, inter alia, rupee interest rate derivatives, foreign currency and foreign currency interest rate derivatives, and credit derivatives. Such transactions are undertaken under various RBI directions, including the Master Direction – Risk Management and Inter-Bank Dealings, the RBI (Rupee Interest Rate Derivatives) Directions, 2025, and the RBI (Credit Derivatives) Directions, 2022, among others.

OTC derivatives are bilateral, non-exchange traded contracts, negotiated directly between counterparties. For clarity, OTC derivatives serve a risk-management purpose for both financial and non-financial firms, by allowing different parties to transfer financial risks to those who are more willing or better able to manage them. RBI distinguishes:

• Users: entities (for example, companies) that enter into a derivative to hedge or manage an underlying risk, such as interest-rate or foreign-exchange risk; and
• Market-makers: usually banks or primary dealers, which quote buying and selling prices for derivatives and act as counterparties to users and to other market-makers. At least one party to an OTC derivative is required to be such a market-maker in the RBI framework.

Their decentralised and ‘over the counter’ nature creates challenges for regulators in obtaining a complete and accurate view of such transactions and market exposures. To address this, the RBI has already mandated that transactions in key OTC derivative segments be reported to the Trade Repository operated by the Clearing Corporation of India Limited (CCIL-TR), however, without a uniform transaction identifier, there can be duplication and difficulty in centralising/ aggregating data on the same transaction across different systems and jurisdictions.

II. Policy Rationale and Importance of the UTI

The Unique Transaction Identifier (“UTI”) will serve as a single unique reference for any particular OTC derivative transaction, also to enable policymakers to obtain a comprehensive view of OTC derivatives transactions and markets. By eliminating double counting and improving data centralisation and aggregation, UTIs facilitate more reliable monitoring of systemic risk, enhance transparency and align local reporting standards with international norms. Earlier RBI communications and related coverage also emphasise that India is implementing UTIs in line with UTI Technical Guidance issued by the Committee on Payments and Market Infrastructures (CPMI) - International Organisation of Securities Commissions (IOSCO) in February 2017, which prescribes common standards for the format and generation of UTIs across jurisdictions, for uniformity.

III. Key Elements of the RBI UTI Directions

The key components of RBI UTI Directions are as follows:

1. Governing directions for OTC Derivative Transactions

The UTI requirement applies to transactions undertaken under the “Governing Directions”, namely:

i. Foreign exchange derivative contracts under the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000, read with the Master Direction – Risk Management and Inter-Bank Dealings;

ii. RBI (Rupee Interest Rate Derivatives) Directions, 2025;

iii. RBI (Forward Contracts in Government Securities) Directions, 2025;

iv. RBI (Credit Derivatives) Directions, 2022; and

v. any other directions as may be specified by RBI.

2. Mandatory UTI for all reportable OTC derivatives

i. A UTI shall be generated and reported for every OTC derivative transaction that is required to be reported to CCIL-TR under the relevant reporting framework.

ii. The requirement applies prospectively to transactions entered into on or after January 1st, 2027.

3. UTI format and technical standards

i. The UTI must conform to the CPMI–IOSCO UTI Technical Guidance.

ii. It is required to:

• Have a maximum length of 52 characters;
• Consist of the Legal Entity Identifier (LEI) of the UTI-generating entity, followed by a unique transaction-specific component;
• Remain unique to the transaction for its entire lifecycle, unless a new reportable contract arises (for example, upon novation giving rise to a new contract, which then requires a new UTI).

4. Waterfall for identifying the UTI-generating entity

i. The circular sets out a waterfall framework to determine which entity generates the UTI. The waterfall differs for:

• Transactions reportable only in India; and
• Transactions reportable both in India and in one or more foreign jurisdictions.

ii. In India, priority is given to:

a. Central Counterparty (CCP), where the CCP is a counterparty to the OTC Derivative transaction;

b. Electronic Trading Platform (ETP), where the transaction is executed on an ETP;

c. An entity that is mutually agreed between the parties; and

d. CCIL-TR as the fallback generator if no other entity generates the UTI and the transaction is reported without a UTI.

For clarity, CCP is referred to herein as a counterparty as it is an entity that becomes the buyer to every seller and the seller to every buyer, ensuring the performance of open contracts, by way of novation to such bilateral OTC Derivative Contracts.

iii. For transactions reportable in India and one or more foreign jurisdictions, priority is given to:

a. Central Counterparty (CCP), where the CCP is a counterparty to the OTC Derivative transaction;

b. Clearing Member, if a Clearing Member is a counterparty to the OTC Derivative transaction;

c. Electronic Trading Platform (ETP), where the transaction is executed on an ETP;

d. If a foreign jurisdiction has a shorter reporting timeline-an entity as per the requirements in such foreign jurisdiction; OR 

If the foreign jurisdiction does not have a shorter reporting timeline-mutually agreed entity between the parties; and

e. CCILTR as the fallback generator.

iv. In transactions wherein a foreign jurisdiction has a shorter reporting timeline, the waterfall accommodates the UTI generated for that jurisdiction, with requirements to submit the final UTI in India within stipulated time limits.

5. Lifecycle events

i. Amendments to an already reported derivative contract do not generally require a new UTI and the existing UTI continues for the modified contract.

ii. Novations or other lifecycle events that result in the creation of a new reportable contract require a new UTI to be generated and reported for that new contract.

6. Role of CCIL-TR and operating guidelines

i. CCILTR is required to issue operating guidelines and reporting formats to facilitate reporting of UTIs.

ii. Where a transaction is reported without a UTI, CCIL-TR will generate a UTI in line with its role as the final step in the waterfall.

IV. Overall Significance

The RBI’s UTI framework introduces a harmonised, globally aligned mechanism for uniquely identifying OTC derivative transactions reported in India. By embedding CPMI–IOSCO standards and integrating the UTI into existing CCIL-TR reporting, the circular seeks to improve data quality, facilitate accurate aggregation of exposures and provide authorities with a more coherent view of risks in Indian OTC derivatives markets.

Please find attached a copy of the Directions, here.

This update has been contributed by Namitha Mathews (Partner) and Tarini Shivhare (Associate).

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