Currency futures trade in the country, which will complete six months of operations this month, continued its saga of success prompting more and more players to participate in it.
The second leg of currency futures enable the Indian market to progress towards currency options market and ultimately give way to full convertibility of the rupee on the capital account.
Easiest way to get Futures prices of MCX & NCDEX
The success of the currency futures though dwarfed compared to over-the-counter foreign exchange market intensified calls for re-introduction of interest rate futures.
Trading volume by India’s three platform providers, MCX-SX,NSE and BSE, increased tremendously during these six months and reached around $700 million from a meager $60 million at the start.
The market expects $1 billion to $1.5 billion average daily turnover by end-2009 and a fourth trading platform by United Stock Exchange of India is set to launch in two or three months.
As per RBI guidelines, only US dollar-rupee contracts with a size of $1,000 each will be allowed for trading. The tick size or minimum price fluctuation will be 0.25 paise.
The contracts will be quoted and settled in the local currency with a maturity of not more than 12 months.
A maximum of 200 contracts are allowed per person and the market timings will be from 9 am to 5 pm. The final settlement will be at 12 noon on the last business day of the month.
The membership of the currency futures market of an exchange will also be separate from the membership of the equity derivatives segment or the cash segment. Such an exchange will be subject to the guidelines of the capital market regulator.
Only a resident of India can participate in the trading and no other agency, including banks, can participate in the futures market without getting the approval of its concerned regulator.
Foreign institutional investors and NRIs (Non Resident Indians) are presently excluded from the market.
A bank can become a trading or a clearing member of such an exchange provided it has capital and reserves worth Rs.500 crore, 10 percent capital adequacy ratio, 3 percent or less net non-performing assets and has a three-year profit record.
