The RBI has deferred the deadline to implement new rules for exchange-traded foreign exchange (forex) derivatives to May 3. The new rules were supposed to kick in from April 5.

The rules are expected to force out most of the market’s most active players, drying up volumes that reached $5 billion a day.

Brokerages have started asking clients to close out contracts after exchanges reaffirmed the ruling from the central bank that participants must have an actual foreign-exchange exposure.

Zerodha, in fact, had asked traders to close open position before April 5 to be compliant with RBI rules.

That rules out individual traders and speculators who comprise a large portion of the volume.

“At least 70 per cent or more of the volume will dry up – half the market is arbitragers,” said Sajal Gupta, the executive director and head of forex and commodities at Nuvama Institutional. “Those traders won’t take fresh positions and have to square off existing positions.”

The rule aligns with the RBI’s broader foreign exchange management policy that has seen the authority tamp down on swings in the rupee in the run-up to the inclusion of the nation’s bond markets in global indexes from June. The rupee has been one of the least volatile currencies among emerging market currencies globally.