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Our Bureau

Mumbai, Aug. 10 The Bombay Stock Exchange (BSE) has applied to capital market regulator SEBI for setting up a currency derivative segment. The Reserve Bank of India and SEBI issued the final guidelines for launch of currency derivatives last week.

Currency derivatives or currency futures are standardised foreign exchange derivative contracts traded on a stock exchange to buy or sell one currency against another on a specified future date, at a price specified on the date of contract, but does not include a forward contract.

The Exchange Traded Currency Futures (ETCF) contracts facilitate increased transparency, efficient price discovery as well as reduced transaction costs. It also enables better counterparty credit risk management, wider participation.

“BSE has applied to SEBI for setting up a Currency Derivatives Segment in line with the recommendations laid down in the Report of the RBI-SEBI Standing Technical Committee on Exchange Traded Currency Futures, released by RBI & SEBI on May 29, 2008,” said a BSE release.

The BSE is now awaiting SEBI approval, after which certain post approval activities for launch of the segment would be undertaken.

The Exchange is exploring strategic arrangements with certain established entities in the forex market which would lend reach, domain expertise and an active participation to this evolving segment, said BSE.

The worldwide average daily turnover in Exchange Traded Currency Derivatives has grown at a CAGR of approximately 23.2 per cent as compared to the CAGR of 10.3 per cent in the OTC Currency Derivatives market.

The domestic OTC volume in Currency Derivatives is approximately $24 billion per day.

More Stories on : Stock Exchanges | Derivatives Markets | Forex | RBI & Other Central Banks

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