Currency futures clock record Rs 29k-cr turnover
7 Jan 2010, 0139 hrs IST, ET Bureau
MUMBAI: Close on the heels of commodities and equity indices trading at multi-month highs, currency futures that went live on MCX Stock Exchange and
NSE in the second-half of 2008 registered their highest-ever turnover of Rs 29,000 crore on Wednesday. This is a clear indication of the popularity of the relatively new product among retail investors.
Futures contracts based on dollar-rupee pair were only introduced in the country in August 2008 and dealers say their acceptability will only grow in the days to come. Some analysts also say that given the surge in volumes, it’s only a matter of time before RBI and Sebi introduced futures based on other currency pairs. There is a strong possibility that these guidelines will be introduced in the monetary policy review on January 29, market watchers said.
“We are at an advanced stage of introducing other currency pairs for currency futures,” RBI deputy governor Shyamala Gopinath said at a business conference on Monday.
NSE launched currency trading towards the end of August 2008 and Bombay Stock Exchange and the MCX-SX followed closely in October. Since then, BSE has announced plans to shift its currency futures platform to the United Stock Exchange, which is awaiting Sebi’s nod to commence currency futures trading. BSE holds 15% stake in USE.
The unprecedented volumes came on a day when the spot rupee rose close to a per cent from its previous close to end the day at 45.86 to the dollar, tracking strength in other Asian currencies after a Chinese government think-thank called for a one-off revaluation of the yuan.
“I will not be surprised if the currency futures segment gradually overtakes the equity futures market, when it comes to daily volumes,” said Ashutosh Khajuria, head of treasury at IDBI Bank. “After introducing pairs other than the dollar-rupee (where one of the legs is the rupee), we should be moving to cross currency pairs (like dollar-sterling.) If Singapore could do it, so can we,” he said. Currently, equity futures register daily volumes in the range of Rs 60,000-70,000 crore.
Forex experts from other banks said markets are also anticipating the entry of foreign funds into this segment.
Markets regulator Sebi said recently in a memorandum to its board that the exchange-traded currency futures market was more efficient than the over-the-counter (OTC) interbank forex market — a decentralised market as opposed to a regulated one — as far as the cost of entering into or exiting a trade was concerned.
Brazil is the only country where the currency futures market has become more liquid than the OTC currency market. India is not the only Asian country to have witnessed a sharp spike in currency futures turnover. The Bank of International Settlement recently reported that the turnover in currency futures in the entire Asia-Pacific region has increased dramatically in 2009 from $127 billion in the first quarter to $692 billion in the third quarter.
7 Jan 2010, 0139 hrs IST, ET Bureau
MUMBAI: Close on the heels of commodities and equity indices trading at multi-month highs, currency futures that went live on MCX Stock Exchange and
NSE in the second-half of 2008 registered their highest-ever turnover of Rs 29,000 crore on Wednesday. This is a clear indication of the popularity of the relatively new product among retail investors.
Futures contracts based on dollar-rupee pair were only introduced in the country in August 2008 and dealers say their acceptability will only grow in the days to come. Some analysts also say that given the surge in volumes, it’s only a matter of time before RBI and Sebi introduced futures based on other currency pairs. There is a strong possibility that these guidelines will be introduced in the monetary policy review on January 29, market watchers said.
“We are at an advanced stage of introducing other currency pairs for currency futures,” RBI deputy governor Shyamala Gopinath said at a business conference on Monday.
NSE launched currency trading towards the end of August 2008 and Bombay Stock Exchange and the MCX-SX followed closely in October. Since then, BSE has announced plans to shift its currency futures platform to the United Stock Exchange, which is awaiting Sebi’s nod to commence currency futures trading. BSE holds 15% stake in USE.
The unprecedented volumes came on a day when the spot rupee rose close to a per cent from its previous close to end the day at 45.86 to the dollar, tracking strength in other Asian currencies after a Chinese government think-thank called for a one-off revaluation of the yuan.
“I will not be surprised if the currency futures segment gradually overtakes the equity futures market, when it comes to daily volumes,” said Ashutosh Khajuria, head of treasury at IDBI Bank. “After introducing pairs other than the dollar-rupee (where one of the legs is the rupee), we should be moving to cross currency pairs (like dollar-sterling.) If Singapore could do it, so can we,” he said. Currently, equity futures register daily volumes in the range of Rs 60,000-70,000 crore.
Forex experts from other banks said markets are also anticipating the entry of foreign funds into this segment.
Markets regulator Sebi said recently in a memorandum to its board that the exchange-traded currency futures market was more efficient than the over-the-counter (OTC) interbank forex market — a decentralised market as opposed to a regulated one — as far as the cost of entering into or exiting a trade was concerned.
Brazil is the only country where the currency futures market has become more liquid than the OTC currency market. India is not the only Asian country to have witnessed a sharp spike in currency futures turnover. The Bank of International Settlement recently reported that the turnover in currency futures in the entire Asia-Pacific region has increased dramatically in 2009 from $127 billion in the first quarter to $692 billion in the third quarter.
