Mumbai: National Stock Exchange of India (NSE), India’s leading stock exchange, has received approval from Securities and Exchange Board of India (SEBI) for introduction of weekly derivatives contracts on US dollar – Indian rupee (USDINR). The launch date for the weekly USD-INR options is 3 December 2018.
The stock exchange in a statement said that all weekly options contracts shall expire on Friday. Eleven serial weekly option contracts will be available for trading excluding the expiry week wherein a monthly contract expires on a Friday. The contracts shall expire at 12.30 pm on the expiry day. The contract size shall be USD 1000 and shall be available for trading in the currency derivatives segment of the Exchange.
NSE launched trading in currency derivatives in August 2008 with the introduction of 12 monthly futures on USDINR and subsequently three monthly and three quarterly options on USD-INR in October 2010. The launch of Currency Derivatives on the exchange platforms in India facilitated participants to hedge foreign exchange risk, brought transparency and provided a settlement guarantee. Contracts traded on Exchange are standardized and provide equal access to players large and small.
The weekly contracts will complement the existing monthly contracts that expire two working days prior to the last business day of the expiry month. Market participants will have complete trading calendar and more choices of expiries.
Vikram Limaye, MD and CEO of NSE said “Availability of USD-INR options contracts with both monthly as well as weekly maturities will offer market participants a flexible and precise hedging tool to manage their exposure and trade short term market movements. The weekly contracts will help participants to limit time-related premium costs thereby offering effective protection for their foreign exchange exposures."
At NSE, market participants can trade futures and options on various currency pairs namely USDINR, EURINR, GBPINR, JPYINR and cross currency pairs namely EURUSD, GBPUSD and USDJPY. The exchange traded currency derivatives have observed significant improvement in liquidity subsequent to revision in regulatory policies governing the product. The currency futures average daily turnover has increased by 79% from ₹ 10,726 crores in FY 18 to ₹ 19,249 crores in FY 19. During the same period, currency options average daily premium turnover has increased by 85% from ₹ 31.2 crores in FY 18 to ₹ 57.6 crores in FY 19. On the basis of premium NSE has a market share of 76.8% for FY19 in currency options.