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Ready to launch: The Finance Minister, Mr P. Chidambaram

Our Bureau

Mumbai, Aug. 25 The Finance Minister, Mr P. Chidambaram, will attend the launch of currency futures at the National Stock Exchange later this week. NSE is scheduled to launch currency futures trading on Friday.

The Minister is likely to meet the top SEBI officials and board members afterwards, said sources.

Currency futures are standardised foreign exchange contracts traded on a recognised stock exchange to buy or sell one currency against another on a specified future date, at a price specified on the purchase or sale date. The RBI has approved only US dollar-Indian rupee currency futures, to start with.

Trading of the currency futures on the exchanges will be a crucial event in the Indian financial market as resident Indians such as students, outbound tourists and patients planning to travel abroad for treatment can hedge their foreign currency risks through this instrument. Of course, entities such as banks, corporations, exporters and importers will be the larger users of this facility.

So far there have only been bilateral currency futures contracts over-the-counter trades, but with commencement of currency trade on the exchanges, the process becomes much more transparent.

Financial Technologies’ subsidiary MCX Stock Exchange has also received SEBI approval to launch currency futures.

One contract will be of $1,000 and will be settled in Indian rupees.

Trading hours for currency futures are between 9 A.M. and 5 P.M. The final settlement will be on the last business day of the month and will be based on the RBI’s reference rate on the last trading day.

SEBI is also formulating guidelines for interest rate futures, which will be traded on the stock exchanges.

More Stories on : Derivatives Markets | Stock Exchanges | Forex

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