Bangalore: In order to consent to the participants in the over the counter (OTC) foreign exchange derivatives market, commodity markets and those with an experience of shipment, to hedge their currency risks, Reserve Bank of India (RBI) has come out with the introduction of six products. The new guidelines will be effective from 1st of February, 2011. The six products include Forward Foreign Exchange Contracts, Cross Currency Options (not involving the rupee), Foreign Currency-rupee Options, Foreign Currency-rupee Swaps, Cost Reduction Structures and Cross Currency Swap. According to the norms, the development of the underlying transaction should not surpassed by development of the hedge. "Where the currency of hedge is different from the currency of the underlying exposure, the risk management policy of the corporate, approved by the board of the directors, should permit such type of hedging," said RBI. Also where the exact amount of the underlying transaction is not ascertainable, the contract may be booked on the basis of reasonable estimates. A periodical evaluation of the estimates should be maintained. RBI holds the power of the final approval for the eligibility of foreign currency/bonds for the hedge as it is mandatory for RBI to approve or allot a Loan Registration Number. Either of Global Depository Receipts (GDRs) or the American Depository Receipts (ADRs), once when have their issue price finalized, will be appropriate for hedge. Balances in the Exchange Earner's Foreign Currency (EEFC) accounts sold forward by the account holders shall remain earmarked for delivery and such contracts shall not be cancelled. The facility of cancellation and rebooking is not permitted for forward contracts, involving rupee as one of the currencies, booked by residents to hedge capital account transactions for tenor greater than one year.