The Reserve Bank of India (RBI) has released a Draft Circular on the Implementation of Unique Transaction Identifier (UTI) for Over-the-Counter (OTC) Derivative Transactions in India, inviting public comments from banks, market participants, and stakeholders by November 14, 2025. This initiative marks a significant step towards improving transparency, traceability, and regulatory oversight in India’s derivatives market.
Understanding the Context: Why UTI Matters
OTC derivatives are customized financial contracts that are privately negotiated and traded outside formal exchanges. While such instruments offer flexibility for risk management and hedging, their opacity and lack of standardization have historically posed regulatory challenges, especially during financial crises.
Globally, post-2008 financial reforms led by the Financial Stability Board (FSB) and the Committee on Payments and Market Infrastructures (CPMI) have emphasized standardized data reporting for OTC derivatives. Two critical identifiers emerged from these reforms:
- Legal Entity Identifier (LEI) – uniquely identifies the parties involved in a transaction.
- Unique Transaction Identifier (UTI) – provides a unique reference number for each individual transaction.
India has already implemented the LEI framework for counterparties in derivative transactions. Now, with the proposed implementation of UTI, the RBI aims to align India’s regulatory standards with global best practices and enhance the traceability of financial market transactions.
Objective of the Draft Circular
The UTI will serve as a single, globally recognizable transaction reference that can be used by regulators and policymakers to:
- Aggregate transaction data across entities, products, and jurisdictions.
- Avoid duplication in transaction reporting.
- Improve market surveillance and risk assessment capabilities.
- Facilitate international regulatory cooperation and data sharing.
By mandating UTI for all OTC derivative transactions in India, the RBI seeks to ensure that each transaction can be uniquely identified and tracked throughout its life cycle—from initiation to termination—regardless of where it is reported.
Benefits to the Indian Financial Ecosystem
The introduction of UTI will bring several benefits to the Indian financial markets:
- Enhanced Transparency:
Regulators will have a complete and consolidated view of derivative market exposures, helping identify potential systemic risks early. - Operational Efficiency:
Standardization through UTIs will reduce reporting errors and reconciliation challenges across institutions. - Global Interoperability:
India’s move to adopt UTI ensures consistency with international frameworks such as those implemented by the U.S. Commodity Futures Trading Commission (CFTC) and the European Securities and Markets Authority (ESMA). - Improved Risk Management:
Better visibility into aggregate positions will empower both regulators and market participants to assess counterparty and liquidity risks more effectively.
Invitation for Feedback
The RBI has invited comments and suggestions on the draft circular from all relevant stakeholders. Feedback can be submitted by post to:
The Chief General Manager,
Financial Markets Regulation Department,
Reserve Bank of India,
9th Floor, Central Office Building,
Shahid Bhagat Singh Marg, Fort,
Mumbai – 400 001.
Alternatively, comments may be emailed with the subject line:
“Feedback on Draft Circular on Unique Transaction Identifier for OTC Derivative Transactions in India.”
Conclusion
The proposed introduction of the Unique Transaction Identifier (UTI) represents a major milestone in India’s journey toward regulatory modernization and market transparency. By bringing the Indian OTC derivatives market in line with global standards, the RBI is reinforcing its commitment to financial stability, investor protection, and data integrity.
Stakeholders are encouraged to share their views by November 14, 2025, helping shape a more transparent and resilient derivatives market ecosystem in India.