India's National Stock Exchange of India Ltd and BSE Ltd on Monday issued circulars to brokers reaffirming the central bank's latest currency derivative rules, which traders fear will hurt volumes in the market.

The rules were first issued by the Reserve Bank of India in a Jan. 5 circular and required exchange-traded rupee derivative transactions to have an underlying foreign exchange exposure.

While a similar requirement existed earlier, it was not strictly enforced.

According to the latest circular, stock exchanges can offer forex derivative contracts involving the rupee to users "for the purpose of hedging contracted exposure", starting April 5.

Traders worry the new rule will hurt volumes as a small percentage of clients have actual forex exposure and many are speculators and arbitrageurs.

"The brokers had communicated their worries to exchanges and regulators but there has been no change in regulatory stance," a person with direct knowledge of the matter said.

(Reporting by Jayshree P Upadhyay; Editing by Eileen Soreng)