The Reserve Bank of India has introduced a major regulatory overhaul for the over-the-counter (OTC) derivative markets, mandating the use of Unique Transaction Identifiers (UTIs) for all trades starting January 1, 2027. This directive, finalized in February 2026, applies to all direct private trades in rupee interest rate derivatives and foreign currency instruments. The move is designed to bring India’s reporting standards in line with global financial practices. By assigning a 52-character code to every contract, the RBI aims to create a permanent audit trail that remains constant throughout the lifecycle of a trade. This will allow regulators to aggregate data effectively and monitor systemic risks in a market that has seen significant scale. Recent data highlights the importance of this oversight. India’s foreign exchange market reached a valuation of approximately 33.40 billion USD in 2025 and is projected to grow at a compound annual rate of 8.4% through 2034. Within this space, currency swaps currently lead with a 40.28% market share, while reporting dealers facilitate 42.1% of all transactions. In the interest rate segment, the RBI’s recent policy shift provides a backdrop of stability for these derivatives. Following a cycle of 125 basis points in rate cuts during the 2024-2025 period, the central bank held the repo rate steady at 5.25% in February 2026. This "neutral" stance is intended to support a projected GDP growth of 7.4% for the 2025-2026 fiscal year while keeping inflation near the 4% target. The UTI mandate specifically targets OTC instruments such as forward contracts in government securities, credit derivatives, and overnight index swaps. Previously, market participants relied on internal deal numbers, which often led to inconsistencies between counterparties. Under the new framework, if a transaction is reported without a UTI, the Clearing Corporation of India Limited (CCIL) will generate one automatically to ensure no trade remains untracked. Financial institutions, including large private banks and corporate treasuries, are now required to upgrade their internal systems to handle these identifiers. While this transition may involve initial compliance costs, the structural shift is expected to reduce counterparty credit risk. To further deepen the market, the government also recently announced the introduction of total return swaps on corporate bonds and new derivatives on corporate bond indices. The timeline through 2027 provides a clear window for the industry to adapt. Operational guidelines from the CCIL are expected shortly to assist with the technical transition, ensuring that India’s derivatives ecosystem—which recently saw cumulative FDI inflows hit the 1 trillion USD milestone—remains transparent and resilient against global volatility.