Appropriate reporting requirements have been prescribed to enable regulators to monitor the build-up of risks in the market. Some market participants expressed view that these regulations are limiting the freedom to express interest rate views and sought a much more liberal regime. The recent regulatory action on limiting short sale in American and European markets underscores the need for appropriate regulation of short selling.
Reserve Bank is, however, constantly reviewing its policy and would consider further relaxations keeping in view the needs of market participants and imperatives of financial stability. 22. In the context of liquidity, I would like to make a broader point which market bodies like FIMMDA & the market participants need to ponder over. Liquidity, like many other market concepts, is a self-fulfilling one.