The market regulator allowed the BSE Ltd. and National Stock Exchange of India Ltd. to offer cross-currency derivatives that will allow companies to hedge their forex exposure.
The Securities and Exchange Board of India allowed both the bourses to launch cross-currency futures and options in euro-dollar, pound-dollar, and dollar-yen, the exchanges said in a statement. SEBI also allowed them to introduce euro-rupee, pound-rupee and yen-rupee options. The regulator expects it help to shift volumes from the over-the-counter market to exchange platform.
Trading in cross-currency contracts (like dollar-euro) has been extended till 7:30 p.m. for these contracts from 5 p.m. For direct-currency derivatives (like rupee-dollar), trading will continue to end at 5 p.m. Trading hours were extended to align trading in cross-currency derivatives with global markets.
The total traded turnover of currency derivatives was Rs 36.64 lakh crore on the NSE and Rs 31.60 lakh crore on the BSE for April-December 2017, according to SEBI data. The open interest in currency derivatives at the end of December was Rs 24,671 crore on the NSE and Rs 8,088 crore on the BSE.
Turnover
NSE (April-Dec)
- USD INR: Rs 33.87 lakh crore.
- EUR INR: Rs 1.1 lakh crore.
- GBP INR: Rs 1.34 lakh crore.
- JPY INR: Rs 31,986 crore.
BSE (April-Dec)
- USD INR: Rs 31.43 lakh crore
- EUR INR: Rs 6,816 crore.
- GBPINR: Rs 8,544 crore.
- JPY INR: Rs 1,339 crore.
Long-term hedging via currency derivatives is yet to pick up on the NSE and BSE. Nearly 80 percent of the turnover of currency derivatives is contributed by one-month contracts on the NSE and 75 percent on the BSE, according to data compiled by BloombergQuint.
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