RBI Proposes Unique Transaction Identifier For OTC Derivatives To Increase Market Transparency

Reserve Bank of India (RBI) has uploaded a draft circular regarding the Unique Transaction Identifier (UTI) for OTC derivative transactions to its website. The central bank sought comments from banks, market participants, and other stakeholders by November 14, 2025.

Feedback can be sent to the Financial Markets Regulation Department of RBI or by email with the subject "Feedback on Draft Circular on Unique Transaction Identifier for OTC Derivative Transactions in India."

Once implemented, all OTC derivative deals in India will be required to include a Unique Transaction Identifier. The identifier will act as a single reference number per deal and will allow regulators to connect and track the same deal in different reporting systems.

What Is A Unique Transaction Identifier (UTI)

A Unique Transaction Identifier, or UTI, is an internationally agreed code for every derivative transaction. It represents a unique identification label for financial contracts that identifies and links every transaction in every global reporting database.

UTI is used in combination with the Legal Entity Identifier (LEI). While LEI serves to identify counterparties to a transaction, the UTI serves to identify the transaction. The two identifiers combined provide accuracy and transparency within derivative markets.

UTI system has already been launched in a number of nations as part of global efforts to make financial markets more transparent and secure after the 2008 financial crisis.

The Purpose of the Introduction

India has already made the use of LEI mandatory for OTC derivative transactions. The next step would be to implement the UTI framework to align Indian markets with international standards dictated by global regulators.

The long-term goal is to avoid duplication of information, ensure consistency across multiple reporting systems, and enable the regulators to take a complete view of the derivative exposures. This helps to identify potential risks in advance and allows for better-informed decisions with regard to financial stability.

With the implementation of the UTI, RBI will also enable aggregation and like-for-like comparison of Indian data across the globe, giving a better sense of where Indian counterparties rank in the global derivatives space.The new rule will mostly hit banks, financial institutions, and large corporates that are involved in OTC derivative transactions. These institutions employ derivatives like interest rate swaps, currency forwards, or credit default swaps for risk hedging or exposure management.

Regular consumers like bank account holders or retail investors will not be impacted by this transition directly. The UTI system is designed for institution-level trades being executed away from exchanges.