Market regulator Securities and Exchange board of India (SEBI) has said any trading activity of banks in the currency derivative space will be guided by Reserve Bank of India (RBI) guidelines. The SEBI , in a circular issued in Mumbai said that banks, whether participating in the currency derivatives segment as clients or as stock brokers, shall be guided by provisions of the RBI. Besides, the regulator said that domestic institutional investors can take position in foreign currency up to USD 100 million or equivalent per exchange in the currency derivative segment.The SEBI said gross open position across all contracts shall not exceed 15 per cent of the total open interest or USD 100 million, whichever is higher. However, this position limit is subject to domestic institutional investors being permitted by their respective sectoral regulators.Last month, the SEBI had allowed foreign portfolio investors (FPI) to participate in the domestic exchange – traded currency derivatives in order to enhance the depth of the foreign exchange market. The central bank had in July last year imposed curbs such as doubling of margin requirement and a ceiling on position limits on exchange -traded currency derivatives.