Mumbai: India’s National Stock Exchange (NSE) will introduce trading in rupee futures from 29 August, the first time exchange-traded currency futures will be available in the country.
Earlier this month, the central bank set market guidelines and said stock exchanges recognised by the Securities and Exchange Board of India (SEBI) could seek the regulator’s approval to offer exchange-traded currency futures.
The Bombay Stock Exchange and a unit of Multi-Commodity Exchange of India have also applied to SEBI to offer currency futures, but their approvals are still pending.
India’s currency market is mostly dominated by cash markets. Currently, forwards are an over-the-counter market, where trades are arranged directly between counterparties. Contracts of up to 12 months are offered and total daily volume is estimated at $34 billion, according to the NSE.
The NSE said on Wednesday it would offer currency futures contracts with maturities of up to 12 months. Contracts will have a face value of $1000, but will be settled in rupees based on the central bank’s noon dollar/rupee reference rate on the last business day of each month.
The market will be open from 9 a.m. to 5 p.m, the NSE said.
One NSE official said 70 to 80% of the exchange’s 1,000 or so members and a sizeable number of banks were interested in the futures.
Currency brokers could take client as well as proprietary positions, the official said.