STATE BANK OF INDIA

GLOBAL MARKETS

MANULA OF OPERATIONS

CHAPTER 24: FOREX OPERATIONS FRONT OFFICE

SECTION 24.2: TRADING IN INTERBANK MARKET

 TABLE OF CONTENTS

SECTION NAME SECTION NO.

CHAPTER OVERVIEW
POSITION MONITORING 24.2.1
DEALING OPERATIONS 24.2.2

LIMIT MONITORING 24.2.3

ACTIVITIES RELATED TO MERCHANT DESK 24.2.4

MIS & REPORTING 24.2.5

START OF DAY AND END OF DAY ACTIVITIES 24.2.6

QUOTING FOR FIXING BENCHMARK 24.2.7

MISCELLANEOUS ACTIVITIES 24.2.8

 CHAPTER OVERVIEW

OBJECTIVE:
To establish adequate procedures and controls for front office operations related to dealing in
foreign exchange related to domestic operations

INTRODUCTION:

Interbank Desks are involved in purchase and sale of foreign exchange in the interbank market
to

• Cover merchant positions, i.e. positions arising out of purchase and sale of foreign
exchange from/to customers
• Proprietary trading i.e., purchase and sale of foreign exchange in the interbank market
with a specific purpose of benefiting from short/medium/long term price swings in the
market and making profit from such trades.

Trading activity comprises of

• Spot/forward purchase and sale of currencies

• Swap transactions (simultaneous buy/sell or sell/buy of currency pairs)
• Currency futures transactions.
•
Objective of the interbank currency trading section are as follows:

• To take view on the short/medium/long term trend of the currency movement and take
positions with the intention of making profit.
• To take positions based on the view of relative interest rate movements of currency pairs
and make profits in the swap market.
• To undertake market making activity to maintain the Bank’s position as a market maker.
• To arbitrage between various markets.
•
Interbank section is divided in following desks:

• Spot Desk:
1. Quoting to Merchant Desk in USD/INR Spot segment
2. Trading in USD/INR in Interbank Spot Market and
3. Trading in Currency Futures on Exchanges.

• Forwards Desk:
1. Quoting to Merchant Desk in USD/INR Forwards (Including Cash and Tom) segment,
2. Trading in Interbank Forwards Markets
3. Arbitrage swaps for generation /utilisation of funds.
• Crosses and Gold Desk:

1. Quoting to Merchant Desk in currency pairs other than USD/INR pair in Spot/Forwards
segment,
2. Trading in Currency pairs not involving INR in Interbank Spot Market. Generation and
Deployment of Funds as per instructions from GMUK.
3. Deal in cross currencies spot and swaps,
4. Deal in transactions related to Gold spot and forwards
 24.2.1 POSITION MONITORING

The interbank deals are done on various e-platforms and also through brokers. The interbank
USD/INR spot and Crosses Desks maintain a “position desk or Khata Desk” where in the Bank’s
net trading position is maintained and monitored on a real time basis. USD/INR forward desk
also maintains similar maturity bucket wise position sheet on a separate spread sheet. Crosses
desk maintains separate position sheet for all approved currencies. The position is maintained
on a comprehensive spreadsheet, that consolidates and nets off the positions arising out of
trading on various e-platforms, broker deals and customer deals on e-platforms, and the net
merchant desk position. The positions are updated real time by the position desk dealer.
At the end of the day, the dealer ensures that the Bank’s net position matches with the position
appearing in Murex for the day.
 24.2.2 DEALING OPERATIONS

Types of Inter-bank trading:

Based on the objectives of interbank trading, the trading can be classified as follows:
• Proprietary trading.
• Cover deals for Merchant trades.
• Market making deals.

1. Proprietary Trading:

• The interbank desk initiates proprietary trades anticipating market movement based on
fundamental and technical view.
• Dealing for proprietary trades is done either on e-platforms (such as FXT, EBS, Fx Clear,
FX All, Autobahn, Bloomberg, City Velocity, 360T etc.) or through brokers.

2. Cover deals for Merchant trades:

Net position arising out of merchant deals is covered in the interbank market by the
interbank desks. Cover operation is based on the view (anticipating market movement
/customer flows) and within the ambit of various risk limits.

3. Market Making

Interbank desk officer two-way quotes to other Interbank counterparts on E-platforms

(FXT/Fx-All/Autobahn/Citi Velocity/360-T etc.) or through brokers.

Deals processing:

1. Direct Deals

Deals done on the E-platforms (FXT/Fx-All/Autobahn/Citi Velocity/360-T etc.) are flown

into Murex via STP (straight through processing) without any manual intervention. After
appropriate portfolio allocation and necessary checks, the deals are validated by the
dealer and sent to Back Office at GMUK for further processing and settlement.

Deals can also be struck with counter parties on messaging systems such as Refinitiv
Messenger, Bloomberg, or other systems as decided from time to time.
These deals are entered on the manual deal blotter and Murex. After validation by
another dealer, these are sent to Back Office at GMUK for further processing and
Settlement.
Back office of the counterparts also send the confirmation to GMUK.
At GMUK the deals are crosschecked, matched and settled. Any difference is immediate
taken up with the Front Office for correction.
2. Brokered deals

A list of empaneled brokers is received from the Global Markets Unit- Kolkata (GMUK).
Deals are done only with the empaneled brokers.

The dealer enters into deal negotiations with the brokers telephonically or on messaging
systems. Once the deal is confirmed and broker gives the details to the Front Office and
sends an email confirmation as well as Broker Note to Back Office. These deals are
entered on the manual deal blotter and Murex.
After validation by another dealer, these are sent to Back Office at GMUK for further
processing and Settlement.
At GMUK the deals are crosschecked, matched and settled. Any difference is immediate
taken up with the Front Office for correction.
Deals cannot be done through brokers during applicable cooling off period (presently 15
days).
On the day when there are broker deals, at end of the day dealers are expected to
reconfirm with brokers the deal concluded during the day.

3. Rupee Sale to Foreign Branches and banks located outside India

The interbank desk also carries out Rupee Sale to banks based outside India for their
Vostro A/c funding. Counter parties include foreign branches of Indian banks and foreign
banks. The deal is struck either on the E-platforms, telephone or on Refinitiv messenger.
In case of a telephonic call, the deal details are noted in the manual deal blotter by the
dealer and entered into Murex. The counterpart intimates GMUK about the deal and
settlement is done by GMUK.
 24.2.3. LIMIT MONITORING

In order to monitor the risk in foreign exchange portfolio various regulatory/internal risk limits
are prescribed in the Forex Trading Policy. Monitoring of these limits is done by the
MRMD/CRMD/Mid Office/GMUK and breaches, if any, are informed to the Front Office.

Approval for breaches in limit:

The breaches in limits such as Daylight limit, Aggregate Gap limit, Individual Gap limit, Daily
Loss Limits, Counter Party Exposure Limit, NOOP Limit etc. are informed by the
MRMD/CRMD/Mid- Office – Mumbai/GMUK.
Front Office provides appropriate reasons for breach of these limits and gets the same approved
from the appropriate authority as defined in the Forex Trading policy from time to time. A copy
of the approval is sent to Risk Department.

Allocation and monitoring of dealer wise limits:

The ALM Policy defines daily and yearly loss limits for the various Forex desks. GM (Forex)
allocates dealer wise loss limits within the overall Forex loss limits. Once the stop loss limit is
reached, the trader stops initiating any fresh proprietary positions and squares off the existing
one. The Chief Dealer ensures that no inter- dealer set-off of positions takes place.

Dealer wise daylight and overnight open position limits are fixed by GM(Forex). These limits are
monitored by Mid- Office, Mumbai. The Chief Dealer also monitors these open position limits.

Counter party limits:

Counter party limits, as advised by CRMD and International Banking Group (IBG) are entered
on the various trading e-platforms. The dealer allocates limit within various e-platforms in
consultation with Chief Dealer. Factors such as volume of deals undertaken on each platform,
available limits for active banks, etc. are considered for distribution of limits.

Rate Scan:

In terms of Forex Trading Policy, all interbank deals are to be done at ruling market rates. Any
deviation in excess of 0.25 % is reported to the Front Office by the MRMD asking for comments.
Front office needs to provide adequate justification for this deviation.
 24.2.4 ACTIVITIES RELATED TO MERCHANT DESK

1. Deal negotiations and booking with customers having Refinitiv FXT dealing system:

Customers having direct access to the dealing room and having access to FXT dealing
system may conclude deals with the Inter-bank desks. They may also place an order on
these platforms.
The confirmed deal details are communicated to the merchant desk for further processing
in Mercury –Fx system.

2. Quoting of Rate to the Merchant desk:

Merchant desk quotes rate to customers in consultation with Interbank Desks keeping in
mind current market rate, customer profile and lot size of the transaction. Merchant
dealers may also quote to customers directly up to a certain amount as advised by Chief
Dealers of Interbank Desks from time to time.

3. Quoting of “base rate for card rate” to Merchant desk

Merchant desk publishes “Card Rate” in Mercury Fx for branches to execute deals of
smaller lot sizes. Chief Dealer Spot Desk advises base rate of USD/INR for card rate to
the Merchant desk. Base rate for cross currencies is directly taken from the system. Card
rates are revised in case of high volatility intra day.

4. Maintaining online rate for crosses (cross currency deals)

Bank provides “Online-Rate” to the branches for dealing with customers. These rates are
published on the online deal booking system –Mercury Fx on a real time basis. The online
rate is based on ongoing market rate with appropriate spread advised by the Chief
Dealers of Interbank Desks. While online rate for USD/INR pair is maintained by the
Khata Dealer of Merchant Desk, online rate for cross currency is maintained by the
Interbank Crosses Desk.

5. Order watching for merchant desk.

Details of Order Management are mentioned in Chapter 24.1.3 of this manual.

Interbank desks watch the orders and provide fills when the level is traded.
Orders may be placed on e-platforms or with other interbank counter parties.
Overnight orders are watched by placing them on e-platforms or with other counter party.
If the customer takes back the order before execution, it is removed from E-platform or
taken back from the counter party bank.
 24.2.5. MIS & REPORTING

The dealers are assigned to put up various MIS reports on a periodic basis to the Top
Management. These include:

1. Daily Profit & Loss Report: DMD (GM)

2. Daily Forex Activity Report: DMD (GM)
3. Daily Prop Trading Report: GM (Forex)
4. Fortnightly Prop Trading Report: CGM (GM)
5. Fortnightly Bids Report: CGM (GM)
6. Deal blotter: DGM (Forex)
7. Futures Report: GM (Forex)
8. Daily Bids report: DGM (Forex)
9. Breach Reports: Appropriate Authority
 24.2.6. START OF DAY AND END OF DAY ACTIVITIES

Dealer undertakes certain start of the day and end of the day activities for ensuring smooth
working of their desks.

SOD Activities:

1. Downloading of Counter party limit reports from Crystal and updation of the same on
FXT platform as well as informing the brokers not to deal with banks on whom limits
are full.
2. Downloading of previous day’s position/profit reports from Crystal.
3. Sharing of views among the dealers

EOD Activities:

1. Checking of all the interbank deals done on various platforms as well as through
brokers for their correctness such as rate, counterparts, value date etc.
2. Matching of net position and profit in Murex with Excel sheet
3. Matching of sum of all Inter bank deals in Murex and Excel sheet.
4. Transfer of position in various folder to MU-CVR-SPT-IB folder of Murex.
5. Reporting of day end position and profit to Chief Dealer and DGM (Forex)
 24.2.7 QUOTING FOR FIXING BENCHMARKS

FBIL publishes Reference rates for USD/INR and EUR/INR around 1.30 PM daily. The rate for
spot US Dollar against the Indian Rupee are computed on the basis of the Volume Weighted
Average of the actual market transactions that have taken place during a randomly selected 15
minute window between 11.30 a.m. and 12.30 p.m. every week- day (excluding Saturdays,
Sundays and Bank Holidays in Mumbai). The transactions data from electronic trading
platforms, obtained by FBIL, would be used for computation of the USD/INR Reference Rate.

In case the required transactions data is not available on account of technical failure/snag or
for any other reason, FBIL may, in that case, compute the USD/INR Reference Rate by
conducting polling of rates from select major banks. FBIL has identified SBI as one of major
banks to which it may ask for quotes in case of technical failure/snag.

Spot Desk has been assigned the task of quoting rate to FBIL.

The other three Reference rates viz EUR/INR, GBP/INR and JPY/INR would are computed by
crossing the USD/INR Reference Rate with the ruling EUR/USD, GBP/USD and USD/JPY rates.

The FBIL Reference Rates are used for settlement of Exchange Traded Currency Futures &
Options as well as for settlement of trade on NDF markets. These rates are also used by various
agencies and corporates as a reference rate.
 24.2.8. MISCELLANEOUS ACTIVITIES

Miscellaneous activities include the following:

• Trends information
• Funds Deployment
• Remuneration Distribution to branches
• Forex operations on the day when Mumbai is closed but at least one major centre (based
on business consideration) is open.
• Disaster Recovery & BCP
• Maintenance of system/Relation with vendor
• Dispute settlement on account of operational discrepancies
• Operational demarcation line in between front office/back office /mid office
• Code of conduct
• Job Rotation
• Amendments in operational manual
 SYSTEM AND CONTROLS

24.2.1 POSITION MONITORING

JOB DESCRIPTION RESP.
At the start of the day, carry forward the previous day’s position, if any, to Position desk
the position sheet. (also called “khata desk”) dealers

Update the positions from various e-platforms on position sheet/khata on a Position desk
real time basis. dealers

Note: “Khata” is a position monitoring spreadsheet maintained by the desk.

The dealer updates the non–reported positions (deals that are confirmed with
the customer at Interbank Desk, but not yet flown in Murex) in the Khata,
every time a deal is concluded with the customer on Reuters. He also updates
the positions of various E-platforms like FXT, FX Clear/Autobahn etc. and
broker/ Rupee Sale telephone deals in the khata on a real time basis. Khata
at crosses desk takes the currency wise position from Murex and updates on
real time. Khata At forward desk enters all interbank deals (E-platform/
brokers/Reuters messenger) and merchant deals, for which quote has been
given and deal concluded on real time basis and arrives at bucket wise gaps.

Update the positions informed orally by the various interbank dealers on a Position desk
real time basis. The interbank dealers would inform the following dealer
deals/position to the position desk:
• Deals done through brokers.
• Rupee sale done to foreign branches/banks (through Reuters’ messenger
or tele-deals).
• Deals booked by the interbank dealers with customers on Reuters’ dealing
system.
• Deals with the currency futures desk.
• Any deals done overnight, i.e. after the Murex EOD (end of day).

On deal being concluded on Reuters’ dealing system, updates the position Position desk
sheet accordingly. dealer

Relay information orally to the position desk dealer every time any deal is Interbank
done on FXT platform/broker for his/her own prop trading. dealer
Enter the position in the dealer’s name in the position sheet, every time a Position desk
proprietary deal is done by the interbank dealer on FXT/through broker. dealer
Ensure that the rate and position (volume) of the proprietary deal are
correctly entered in the position sheet.
 JOB DESCRIPTION RESP.

Note: The proprietary deals done on the FXT platform will be updated in Position desk
the gross position of FXT as appearing in the Totalizer , and would need to dealer
be reduced from the same, to give a correct picture of the bank position for
other than proprietary trading purposes. Thus, a contra is entered in the
position sheet to ensure that the position sheet gives the correct bank
position at any point of time. Similarly, proprietary deals through brokers
need to be suitably positioned in khata sheet
Ensure that position as per the khata position sheet and net position in Murex Position desk
(for the interbank as well as Import folder) match at the end of the day. dealer

Confirm that spot position transfer function has been performed in Murex Position desk
and that all the merchant positions are transferred to the interbank folder. dealer
 24.2.2 DEALING OPERATIONS

JOB DESCRIPTION RESP.

Cover deals and market making deals
Monitor the bank position on the e-platform, and strike a deal based on the Inter-Bank
market movements. Dealer
Note: At present, the following E- Platforms are used for striking the deal:
INR Spot: FXT , Fx All , Fx Clear (CCIL), Autobahn, Citi Velocity, 360T
Crosses: FXT , Fx All , Fx Clear (CCIL), Autobahn, Citi Velocity, 360T, Barx
Forwards: FXT, Fx Clear (CCIL), Autobahn
Currency Futures: BSE BOLT, NSE NOW, MSE
Bank may decide to deal on additional platforms if needed

Monitor the counterparty limit on the E-platform. Ensure that the deal is being Inter-Bank
done only with the counterparty for which the limit is available. Dealer/
Chief Dealer

If the Counterparty limit is exhausted on any platform, bring the matter in the Inter-Bank
knowledge of Chief Dealer immediately. Dealer

In such cases, decide on whether counterparty limit is to be borrowed from Chief dealer
other sources such as Forward/ IRM desk or any other department.
In case the limit is borrowed, update the counterparty limit on the platform Inter-Bank
as elaborated in the limit monitoring section in 24.2.3. And inform Mid-office, Dealer
Mumbai regarding borrowal of limit.

Verify that all the deals struck on the E-platform have flown in the “IMPORT” Inter-Bank
folder in Murex. Dealer

Allocate the requisite portfolio to the deals in the Import folder. All interbank Inter-Bank
deals to be allocated to MU-CVR-SPT-IB portfolio and proprietary deals to Dealer
respective dealer’s portfolio.

If any deals done on behalf of RBI than those deals should be allocated Chief Dealer
respective RBI folder.

Exploit Arbitrage opportunities between Currency Futures Exchange Market & Inter-Bank
OTC Dealer
 JOB DESCRIPTION RESP.
Validate the deal after the requisite portfolio is allotted in Murex. The Inter-Bank
deal will then go to Back office for second validation. (BO Validation). Dealer
At the end of the day, ensure that all deals in the “import” folder in Inter-Bank
Murex are allocated an appropriate folder in Murex and no live deals are Dealer
pending in the “import” folder.
Proprietary trades
Based on the fundamental and technical views initiate a proprietary position. Inter-Bank
Strike a deal on e-platform or through broker. In case, looking for a particular Dealer
level to initiate position or square off the position, leave the order at respective
desk to be managed by other dealers.

Ensure that all proprietary orders are executed at the given level. Relay the Inter-Bank
information orally to the position desk dealer, for USD/INR trades on the Dealer
proprietary position taken. Enter the deal in proprietary dealer’s folder in
Murex.
Allocate the requisite proprietary portfolio to the deal in the import folder after Inter-Bank
the deal has flown to Murex. Dealer

Validate the deal after the requisite proprietary portfolio is allotted in Murex. Inter-Bank
The deal will then flow to Back office for second validation. Dealer

Note: At the end of the dealing activity the dealer will ensure that all Inter-
Bank deals done on various E-platforms are flown in Murex and validated by
front office. Number of deals in each platform needs to be tallied by the deals
flown with the same source code in Murex. This is to be checked at EOD by
using deal blotter in all e-platform and the corresponding deal blotter in Murex.

Note: The Chief dealer has to monitor the dealer loss limits on an ongoing
basis. Thus, based on dealers profit and loss position for the day along with
the market condition the Chief dealer can approve or deny the proprietary
position to be taken by the dealer. In case the deal is already done, the Chief
Dealer may also instruct the dealer to square off the position.
 JOB DESCRIPTION RESP.
Rupee –Sale to Bank’s foreign branches
Rupee sale to foreign branches and foreign banks outside India can be done
either on the e-platform or by telephonic deals or through messaging
systems ’
In case the deal is done over Telephonic Call/ Messaging Systems, note the
details of the deal on the manual deal blotter.

Based on the manual deal blotter enter the deal in Murex. Other dealer will Inter-Bank
validate the same and send it to Back Office for further processing and Dealer
settlement.
Back office of the counter party bank will send confirmation to GMUK of the
deal. GMUK will cross check the deal before further processing. Any Back Office,
difference will be brought to notice of the Front Office. GMUK

In case the deal is done on e-platforms, follow the process for deal
processing as stated above in section 24.2.2

BROKER DEALS
Inter Bank dealers, deals with the empanelled brokers only. A list of
empanelled brokers is advised by the back office GMUK. The deals can
be concluded with the brokers on various messaging systems or over
telephone.
Once the deal in struck, enter the deal details of the deal struck with
Interbank
the broker on the manual deal blotter.
dealer
Enter the deal in Murex. Another dealer validates the deal in Murex
after comparing the same with the manual deal blotter and sends it to
GMUK for further processing and settlement.
Ensure that no deal is done with brokers during the cooling off period
as advised by GMUK
Broker send an email confirmation and broker note to the Back Office, Back Office,
GMUK. GMUK will cross check the deal before further processing. Any GMUK
difference will be brought to notice of the Front Office.
JOB DESCRIPTION RESP
LATE DEALS

DEALS DONE AFTER HANDING OVER OF INTERFACE

Strike the deal on e-platforms and enter the details in Late Deal Register.

On the next day, ensure that the deal has flown in Murex “Import” folder
through STP.

Relay the information to the position desk dealer for updating the position
sheet. Interbank
dealer
Allocate appropriate folder to the deal in the import folder and validate the
deal in Murex.

Note the Murex deal ID in the manual register and timing of the deal and
put up the register to the Chief Dealer and the DGM (Forex) for sign off.

DEAL DONE BEYOND DEALING HOURS

Dealing room business hours will be guided by Forex Trading Policy of the
Bank and approval from DMD (GM) taken from time to time. Thus, any
deal to be concluded after these hours will be treated as late deals. At
present, Forex Desk dealing hours are from 8 AM to 12 Midnight.

Inform DGM (Forex) of the deal to be concluded after the dealing room
business hours along with the reasons for the same.
Interbank
Obtain the approval from DGM (Forex) for the deal to be concluded. dealer
Prepare a note for the late deal the following day, and put up to the DGM
(Forex) for approval. The note should contain the details of the deal
concluded along with reasons for the same.

Prepare a report with particulars of late deal undertaken along with the
reason thereof and put up to GM (Forex) and forward a copy of the same
to the back office GMUK, who will arrange for independent verification of
the deal.
 JOB DESCRIPTION RESP.

DEAL CANCELLATION
Cancelled and reissued deals
In cases where any erroneous deal is flown/ entered in Murex and is Interbank
validated by Front office/back office, the Chief Dealer can amend the deal Dealer
by cancelling and reissuing the deal. A report for all such cancelled and
reissued deals will be put up to DGM (Forex) next day.

In case of change of settlement instruction at the request of counter party

or our Back Office at GMUK, deal needs to be cancelled and reissued by
the Chief Dealer.
Enter the deal details along with reasons in brief for cancel and reissue in
the manual “Cancel and reissue deals register” and sign off the same. If
system generated report is available then the report itself should be signed
off. Forward the register to Chief Dealer for sign off.

Sign off the register and Cancel and reissue the deal in Murex. Chief Dealer

In cases where any erroneous deal is flown/ entered in Murex and is not Interbank
validated by Front office, the dealer can amend the deal after informing dealer
the Chief Dealer.

At the start of the day generate the ‘cancelled and reissued deals and
cancelled only’ report from Crystal for the previous day for all types of
Interbank Deals.

Put up the report/register to DGM (Forex) for sign off.

JOB DESCRIPTION RESP.
Deal Deletion (Cancellation):
1. In case a deal ticket is erroneously generated for a customer deal
which is to be reported by the branch, take a contra position in the
khata.
2. In case of wrong hit (deal at off market rates), take a contra
position in the khata
3. In case deal ticket is prepared or entered manually erroneously
more than once, take a contra position in the khata.

As the deals automatically flow to Murex through STP, such deals need
to be deleted from Murex by DGM (Forex)

Enter the deal details along with reasons in brief for deletion in the Interbank
manual “Cancelled deals register” and sign off the same. If system dealer
generated report is available then the report itself should be signed off.
Forward the register to Chief Dealer for sign off.

Sign off the register and forward the same to the DGM (Forex) for sign Chief Dealer
off. If system generated report is available then the report itself should
be signed off.

Sign off the register and delete (Cancel) the deal in Murex. DGM (Forex)

At the start of the day generate the ‘cancelled only’ report from Crystal
for the previous day for all types of Interbank Deals.

Put up the report/register to DGM (Forex) for sign off.

 24.2.3 LIMIT MONITORING

JOB DESCRIPTION RESP.

Fixing of desk wise/dealer wise limits
Grant approval for granular level limits such as daily/yearly stop loss, GM (Forex)
proprietary trading stop loss, and currency wise day light/overnight
position limits both desk wise and individual dealer wise. Also allocate
any other limit mentioned as per Forex Trading policy within the overall
limits approved limits.
Portfolio allocation to dealers
Note: Various portfolios (folders) are created in the Murex system for
correct differentiation of trades as merchant/interbank- cover/interbank
proprietary etc. There are different trader wise folders created in the
system for arriving at the dealer wise proprietary trades. The portfolio
creation/ allocation are done as and when required.

Obtain approval from GM (Forex) for portfolio allocation to the dealers. Chief Dealer

Monitoring the dealer wise loss limits:

Ensure that the dealer monitors the loss limits on a real time basis Chief Dealer
(Murex shows portfolio wise profit/loss).

On an ongoing basis review the dealer wise loss limit for the day. Chief Dealer

If the dealer reaches a stop loss limit immediately square off his open Interbank
position. dealer

Ensure that the dealer does not take any new proprietry position during Chief Dealer
the day once the stop loss limit reached.

Approval of Breach in limits and/or rate scan deviation

The CRMD/MRMD/Mid Office,Mumbai and GMUK monitor various limits
such as day light limit, aggregate gap limit, individual gap limit, counter
party exposure limit, NOOP Limit etc.. For any breach of limit, reasons
for the breach and appropriate approval for the same are sought from
the front office.
The MRMD also carries out rate scan process to ensure that Interbank
deals are not done at off- market rates. Any deviation beyond the policy
specified percentage (0.25 %) requires an explanation from front office
and approval from the appropriate authority.

Obtain approval on receipt of report for breach of limits from the above Interbank
as per the process approved in Forex Trading policy. dealer
 JOB DESCRIPTION RESP.
Updating counterparty exposure limit on e-platform
Allocate the limit in various trading platforms, wherever possible based on the
average volume of trades on those platforms and update the same on the Inter-Bank
regular basis, within the overall limit. Dealer
In case the limit on e-platform has to be changed due to
lending/borrowing with/from various desks, follow the process as stated
below:
Borrowing within the domestic markets
Obtain approval for limit to be borrowed and the period for which the
same is to be borrowed. Put up to the DGM (Forex) for approval and send Inter-Bank
a copy of approval to Mid-office, Mumbai. Dealer
Lending within the domestic markets
On Receipt of a request from other department, for limit borrowal, obtain
approval from DGM (Forex), and advise the same to Mid Office, Mumbai. Inter-Bank
Dealer
Lending/borrowing with foreign offices
Confirm over Reuters’ conversation the details of the limit to be
lend/borrowed. Inter-Bank
Dealer
Enter the Reuters’ conversation number and date of the Reuters’
conversation in the “Limits register”. Sign off the register and put up the Inter-Bank
same to Chief Dealer for sign off. Dealer
Sign off the Limits register after verifying the necessary details with the Chief
Reuters’ conversation. Dealer
Note: The Mid-office, Mumbai would make changes in Murex based on the
memo received from Front Office. At the end of the lending/borrowing
period, the Mid-office, Mumbai would ensure that the limits are restored.
 24.2.4 ACTIVITIES RELATED TO MERCHANT DESK

JOB DESCRIPTION RESP.

Deal negotiation and booking with customers on FXT
Quote rates to the customers on FXT dealing system.
In case the customer places an order, Confirm the deal on FXT dealing
system once the order gets filled.
Relay the information of the order filled to the position desk dealer
Forward the details of the deal struck with the customer to merchant desk
for further processing
Quoting of rate to merchant desk
Based on the current market rate and appropriate spread, quote the rate
to the merchant desk dealer
Quoting of base rate to merchant desk
At the start of the day, quote the base rate to the merchant desk based
on the present market rate and expected market movement.
Inter-Bank
Quoting of Online rates Dealer
Online rate for GBP/USD and EUR/USD are maintained and published by
the interbank- cross currency desk.
Update the online rate for cross currencies on Mercury Fx based on the
current market rate. The spread is decided by the dealer based on market
volatility in consultation with the Chief Dealer.
The branch will view the online rates published on Mercury –Fx and
negotiate deals with customers. Once the deal is finalized with the
customer, the branch will enter the deal and “commit “the rate on Mercury
– Fx. The deal committed on Mercury- Fx will automatically flow in Murex
in the merchant portfolio.
 JOB DESCRIPTION RESP.
Order watching for merchant desk
Watch the orders placed by Customer through Merchant Desk.
Give the fill once the level is traded and Advise the Merchant dealer about
filling of order
Decide whether the order is to be watched or, placed in E-platform with
counterparty bank depending on the bank position and market conditions.

In case the order is watched or placed in E-platform, once the orders is

filled advise merchant desk and update the khata position with the deal.
In case the order is placed with counterparty, and the order is filled in by Inter-Bank
the counterparty, conclude the deal on Reuters Conversation with the Dealer
counterparty bank.
Proceed to deal processing as stated in dealing operations- dealing on e-
platform as stated in section 24.2.2
Inform the merchant desk dealer and the khata desk dealer of the order
filled in, and return the order book or manual blotter after marking the
order filled.
In case the order being watched was not filled in, till the end of the dealing
hours, place it as overnight order in E-platform or with counterparty bank.

Back all unfilled USD/INR orders at close of normal market hours.

Enter orders in USD/INR in order book for watching beyond normal market
hours.
 24.2.5 MIS AND REPORTING

JOB DESCRIPTION RESP.

Prepare the following reports on daily basis and report it to the management.
1. Desk P&L report for various currencies
2. Proprietary P&L based on dealer-wise activity, currency-wise performance
comparison.)
3. Consolidated P&L report for Forex operations
4. All deal blotter
5. Open position in various currency pairs.

Forward desk trading profit information sheet is taken from excel sheet
maintained by the desk. It has to be ensured that all the negative MTM for
different period has been crystallized and only positive MTM, if any is carried
over.

Generate the folder wise/dealer-wise deals done for the day report from Crystal. Inter-Bank
Verify the deals appearing in the trading portfolio are the deals that are only Dealer
those that are struck by him and sign off the same the report as an evidence of
the same.

Cancel and reissue and cancellation report.

Receive the dealer wise deal report signed off by all the dealers. Sign off each
report and forward the same to DGM (Forex) for information.

On a monthly basis, compile the following reports and put up the same to the
competent authority.

-Monthly Report on Strategic Position (a monthly report on the P&L figures

currency-wise and dealer-wise).
 24.2.6 SOD & EOD ACTIVITIES

JOB DESCRIPTION RESP.

Start of Day
For crosses: Interbank
At the Beginning of the day, perform the splitting position function on the Dealer
position generated from profit sell down process in Murex. This will generate
open position deals for respective desk for cover operation.

Update the position sheets at Spot, Forwards, Crosses and Merchant desks for
the day with the opening outstanding positions.
Update the Spot /Swap rates for Online rates application in Mercury FX for Cross
Currencies.

Verify the available counter party exposure limit in Murex and Update the same
in E-platforms wherever possible, on estimated basis from the available limit. All
inform the brokers about not dealing with banks on which limits are full.

Verify fills on all overnight orders placed or watched for Merchant or proprietary
position.

All unfilled and filled orders to be advised to Merchant desk who will in turn
advise the same to the customers.

Verify overnight deals done after handing over of Interface previous night and
check the same with the overnight deal register. Mark the Murex ID against each
deal and put up to DGM (Forex).

Enter the deals in Murex done after close of dealing hours the previous Interbank
working day, get it validated by other dealer and send immediately to Back Dealer
office for processing and settlement.

End of the day

Prior to handing over the Murex to IT-TSS for performing the end of the day, Interbank
perform the position transfer function in Murex. This will auto generate internal Dealer
deals in Murex for creation of consolidated deals reflecting net position for all
the Merchant deals.

Ensure that all deals done during the day in Inter Bank are validated by Front
office. Verify the “trade query” tab in Murex before the end of the day, and
before leaving the desk as NOTHING should remain as “FO-Initial (live deals)”
OR “FO to Validate” status in Murex.

Ensure that all deals have flown into Murex, and that the total number of deals
done on different platforms tally with total number of deals in Murex,
Note: The numbers of deals on each electronic platform are compiled from query
reports generated from each platform. The total number of these deals are
compared with the Murex “Source reconciliation”