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Amid much noise over the Covid-19 crisis, India silently marked yet another landmark in offshore currency derivatives trading through the International Financial Services Centre (IFSC) at GIFT City near Gandhinagar. Launched virtually by the Union Finance Minister Nirmala Sitharaman on May 8, the Rupee-Dollar derivatives on BSE’s India International Exchange Limited (IndiaINX) has started registering $150-200 million of daily volumes.
“It has just been a few days of tradingand daily trading has reached in the range of $150-200 million in rupee-dollar futures and options. We can say it has been a decent start. However, these are very early days at present, and we are still under lockdown. But as we move forward, we expect more international participants to join in,” V Balasubramaniam, MD and CEO, India INX, told Businessline .
With this volume, the exchange has already obtained 90 per cent market share in the currency (rupee-dollar) derivatives segment within IFSC at GIFT City.
SGX, DGCX
Balasubramaniam stated that in terms of regional comparison of rupee-dollar derivatives trades, IndiaINX has already secured 6-7 per cent market share between SGX, Singapore, and DGCX, Dubai.
Giving an outlook for the next two quarters or next six months, he stated that IndiaINX is aiming to achieve a volume of about $2.5-3 billion. “This will be at least 25-30 per cent market share in terms of exchange-traded markets for rupee-dollar derivatives. In pre-Covid times, SGX and DGCX put togetherhad volumes of about $8 billion; so, by October, we should be get closer to $2.5-3 billion to make that 25-30 per cent market share,” said Balasubramanian, adding that IndiaINX looks to become a preferred exchange for offshore participants.
Trading of INR-USD futures and options enables participants to hedge, trade and settle in USD with market rules and ecosystem at GIFT-IFSC on a par with other global markets. With the launch of INR-USD derivative, the trades that have been migrated to other international financial centres such as SGX or DGCXwill now bring rupee trading home.
The latest contract has underlying assets, USD-INR Spot Rates and INR-USD Spot Rates. The contract is available for 12 monthly and 11 weekly contracts for both.
“The unique benefit of our contract is that due to our location in GIFT City we are the only exchange in the region to offer this product for 22 hours in a day. Right from Japan opening to US closing, we are catering to all the investors with this product always being available,” he added.
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