The Presidents / Chief Executives
All Banks / DFIs

Dear Sirs / Madam,

FINANCIAL DERIVATIVES BUSINESS REGULATIONS – ISDA AGREEMENT

Please refer to Derivatives Business Regulations (FDBR) issued vide BSD Circular No.17 dated November 26, 2004.
2) In order to facilitate the derivatives transactions of ADDs/NMIs, it has been decided to allow the use of Long-form Confirmation in place of ISDA Agreement for certain derivative transactions. Consequently, the existing Regulation No. 33 of the FDBR is replaced by the following with immediate effect: 33. No derivatives transaction will be executed by the ADDs/NMIs unless International Swaps and Derivatives Association (ISDA) Agreement has been exchanged with the other entity. However, for FX
Options, Long-form Confirmation instead of ISDA master agreement can be used, provided that:

a. The tenor of FX option is up to one year.

b. The notional principal of the FX option is up to USD 2 million or equivalent .

c. The aggregated notional principal of all derivative transactions, including IRSs and FRAs, executed with the other entity by the
ADD/NMI during immediate last 12 months is up to USD 20 million or equivalent. As soon as the aggregated notional principal exceeds the limit of USD 20 million, the ADD/NMI should enter into ISDA master agreement with the other entity before entering into the transaction which results in such excess. For calculating the aggregated notional principal, the gross amount of all the derivative transactions entered into with the bank whether matured or outstanding should be used.
3) Other instructions on the subject shall, however, remain unchanged.