SEBI okays NSE's plan for currency trading

[SUKUHOPES]

MUMBAI: India's first exchange for trading in foreign currency
derivatives is likely to go live on the NSE's platform. NSE, the
country’s largest stock exchange by volumes, on Tuesday got an in-
principle approval from the Securities and Exchange Board of India
(SEBI) to start an exchange to trade foreign currency derivatives,
sources said.

According to plans, NSE will have a separate segment on its existing
stock and derivatives bourse to trade in forex derivatives. It would
also use its clearing corporation to settle the trades on the new
segment.

“It’s not only the NSE brokers, most of the large and medium sized
banks have been very supportive in NSE’s endeavour to start a currency
exchange,’’ a source said. “They will get another asset class to
invest in,’’ the source added.

Last week RBI, the banking regulator, along with stock market
regulator SEBI, had made public the rules that would govern currency
derivatives exchanges in the country. Soon after three bourses-NSE,
Multi Commodities Exchange (MCX), the largest commodities trading
bourse in the country, and Bombay Stock Exchange (BSE), the oldest
stock exchange in Asia-had jumped into the fray to start forex
exchanges.

Over the last few weeks, both NSE and MCX, had been conducting
awareness programmes among probable market participants for a currency
trading platform. When a forex derivatives trading platform goes live,
Indian investors would also get newer forex trading and hedging
products, industry players said. At present, in the forex trading
space, market participants have the option of either trading in spot
or the forward contracts.

To start with, RBI-Sebi combine has allowed futures contracts in rupee-
dollar contracts. The roadmap is to launch contracts on other
currencies post the initial trading phase.

N.Sukumar
Research Analyst