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Reserve Bank of India (RBI) | Clearing Corporation of India Limited (CCIL)
The Reserve Bank of India (RBI) has released final directions mandating the use of a Unique Transaction Identifier (UTI) for all Over-the-Counter (OTC) derivative transactions, effective January 1, 2027. This framework is designed to align India’s derivative reporting with global standards set by CPMI-IOSCO, providing policymakers with a comprehensive view of market risks and exposure. The mandate covers transactions in Rupee interest rate derivatives, foreign currency derivatives, credit derivatives, and forward contracts in Government securities. Each UTI will be a unique 52-character code linked to the Legal Entity Identifier (LEI) of the generating party, ensuring that a single reference number follows a transaction throughout its entire lifecycle. To prevent reporting gaps, the RBI has established a “Waterfall Mechanism” to determine which counterparty is responsible for generating the UTI in both domestic and cross-border trades.
Key Pillars of the UTI Implementation Framework
Mandatory Scope: All OTC derivative transactions, including interest rate, foreign currency, and credit derivatives, must be reported to the CCIL Trade Repository with a valid UTI.
Global Standardization: UTIs are generated following CPMI-IOSCO technical guidance, using a maximum of 52 characters (LEI + unique string).
Waterfall Generation Logic: A sequential hierarchy determines the generating entity, moving from market-makers to identified entities or the Trade Repository if necessary.
Cross-Border Alignment: For transactions reportable in multiple jurisdictions, the framework allows for the use of UTIs obtained from foreign jurisdictions with sooner reporting deadlines.
Lifecycle Traceability: Amendments or post-reporting events do not require a new UTI, though new reportable contracts (like novations) necessitate a new identifier.
What is the “Waterfall Mechanism” for UTI? The Waterfall Mechanism is a sequential rule-set used to determine which party in an OTC derivative transaction is responsible for generating the Unique Transaction Identifier (UTI). This prevents the creation of duplicate identifiers for a single trade. The hierarchy typically prioritizes the most sophisticated market participant: it starts with the “Seller” or “Market-maker”; if neither exists, it moves to the party identified by agreement; and if no agreement is reached, the responsibility falls to the Clearing Corporation or the Trade Repository itself. This systematic approach ensures that every transaction is uniquely tagged and traceable without administrative ambiguity.
Policy Relevance
The mandate represents a transition from “Siloed Trade Reporting” to “Aggregated Market Surveillance,” allowing the RBI to detect systemic risk build-ups in the $1.1 trillion OTC derivatives market.
Strategic Impact:
Global Market Integration: Aligning with CPMI-IOSCO standards acts as a “Standard Maker” move, ensuring that Indian financial institutions remain compliant with international reporting regimes like EMIR and Dodd-Frank.
Systemic Risk Mitigation: Providing a unique digital audit trail for complex derivatives supports the “Trust Architecture” required for India’s goal of becoming a global financial hub by 2047.
Operationalizing Transparency: The 52-character identifier ensures that the 490 obligated entities and other large corporate users can manage their hedging portfolios with higher precision and lower reconcilliation costs.
Maritime & Trade Security: Enhancing the transparency of foreign currency derivatives directly supports the stability of the $354 billion services surplus by protecting against unmonitored exchange rate volatility.
Implementation Fidelity via CCIL: Leveraging the Clearing Corporation of India (CCIL) ensures that the underlying digital infrastructure for financial settlements is robust, secure, and ready for high-volume trade
Relevant Question for Policy Stakeholders: How might UTI-based surveillance feed into broader reforms in bond market deepening and currency internationalisation?
Follow the full RBI notification here: RBI: UTI for OTC Derivative Transactions - February 18, 2026