SEBI eases margin on currency futures

Our Bureau Mumbai | Updated on April 07, 2014

Market regulator SEBI has lowered the margin requirement for currency futures traded on the NSE, the BSE, the MCX Stock Exchange and the United Stock Exchange. The cut in margins will come into effect from April 15.

The move is expected to improve the sagging turnover on the currency futures platform.

In July last year, the market regulator had doubled the initial and extreme loss margins for dollar-rupee contracts due to extreme volatility.

Besides increasing the margins, SEBI has also reduced the position limits. The gross open position of clients across all contracts will not exceed 6 per cent of the total open interest or $10 million, whichever is lower, SEBI said.

The gross open position of a trading member, who is not a bank, across all contracts, shall not exceed 15 per cent of the total open interest or $50 million, whichever is lower. Though SEBI has eased the margin call, it has retained open position curbs. Following this directive, turnover on the currency trading platform plummeted. On the NSE, the daily average turnover fell from ₹38,766 crore in June, to ₹17,815 crore in July. Similarly, on the MCX Stock Exchange, it fell to ₹13,517 crore from ₹24,144 crore.

Published on April 07, 2014

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