Mumbai: “The Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) are in discussions to relax the currency trading norms, following demands from the market participants,” a top Sebi official said today.
“There are demands from market participants that the currency trading norms should be relaxed. RBI and Sebi are working together to relax the norms,” Sebi Chairman, C B Bhave said here.
Further relaxation in currency trading norms is expected to enable all category of marekt particpants to trade in currency futures. Presently, only a selected category of players are allowed to trade in currency futures.
“The regulators have been trying to ensure transparency and timely settlement of transactions in the system, which are essential to develop a healthy financial system in the country,” Bhave said.
“We have been trying to bring in assurance of settlement and transparency in the market. The present financial crisis in global markets is an outcome of lack of faith on these principles,” Bhave said.
Bombay Stock Exchange (BSE) launched currency derivatives segment (BSE-CDX) that would enable participants to hedge their currency risks through trading in the dollar-rupee platform.
The National Stock Exchange (NSE) had kicked off exchange-traded currency futures for the first time in the country on 29 August, while leading commodity bourse Multi Commodity Exchange of India (MCX) is expected to launch the facility soon.
MCX had secured the in-principle nod for starting currency futures trading in August this year.
Earlier, participants had to depend on over-the-counter (OTC) products such as forwards, swaps and options to hedge their currency risks.
Exchange traded currency futures (ETCF) has grown at a CAGR of around 23.2% worldwide as compared to 10.3% growth in the OTC currency derivatives market.
“ETCF contracts facilitate easy access, increased transparency, efficient price discovery and better counter party risk mangement in the system,” BSE Chief operating officer M L Soneji said.
“Presently, many entities are impacted by the currency risk either directly or indirectly, this platform will help to hedge this risk. We are also offering the unique feature of buying positions in one month and selling in the next,” Soneji said.
BSE has also launched training programs in currency futures to educate investors and develop expertise among the market participants.
BSE has reach to around 450 cities and towns in India and has more than 4,800 listed companies on the board, with total scrips trading over 7,500 scrips.