RBI Recognises FIMMDA As Self-Regulatory Organisation, Gives Formal Powers To Oversee Business

In a move towards strengthening supervision in the financial markets, the Reserve Bank of India (RBI) has recognised the Fixed Income Money Market and Derivatives Association of India (FIMMDA) as a self-regulatory organisation (SRO). This recognition gives FIMMDA formal powers to a greater extent to oversee the business conduct of its members and impose fair practices in the markets it operates.

How FIMMDA Functioned Before 

FIMMDA, which was formed in 1998, represents banks, insurance companies, primary dealers, and other institutions that trade in the fixed income, money market, and derivatives segments. Over the years, it has published benchmark rates like MIBOR, issued standardised documentation, and provided guidance on market practices.

Until now, FIMMDA was basically an industry association. It had brought about the dissemination of best practices and had acted as a coordination hub and knowledge-sharing platform. But, as of now, it had no authority to impose regulation or oversee compliance. Its operations were advisory, and compliance with its instructions was optional.

What Will Change Now

With FIMMDA now being granted SRO status, it will now have more formal roles. It will be mandated to establish clear rules for members, see to it that they follow them, and penalise it in cases of violations. This provides a more active role for FIMMDA in ensuring equitable conduct in the financial markets.

This change is expected to make regulation more effective, as issues specific to a sector can be dealt with directly by an organisation with grassroots knowledge. At the same time, RBI will still regulate FIMMDA and ensure that it functions in a transparent and fair manner.

Being an SRO, FIMMDA will now have to adhere to high standards of governance. It must not be associated with conflict of interest, be equitable towards all members, and be transparent in its functions. Its designation is likely to lead to increased accountability, quick decision-making, and smoother functions of the financial markets.

This action is also moving India towards global market standards, where self-regulatory bodies are important in implementing market discipline subject to supervision by a central regulator.

How the Recognition Came About

FIMMDA’s recognition as an SRO is under a bigger picture by RBI for tighter regulation in financial markets. RBI had already announced a framework for the recognition of SROs in regulated markets. It had invited applications from appropriate bodies under the framework.

FIMMDA applied under the same, and after reviewing its application and operations, RBI found that it met the desired requirements. Accordingly, the central bank granted the SRO status to FIMMDA on May 7, 2025.