NSE to start trading in currency futures from 29 August

Mumbai: The National Stock Exchange (NSE) will start trading in currency futures from 29 August. Finance minister P Chidambaram will inaugurate trading at the NSE premises on Friday.

NSE already has over 300 registered members participating in the platform, while 10 banks also would go live on currency futures the same day.

Each member will have more than one user and there will be many people who will be participating on day one of the trading. The exact number of participants is not known, but there seems to be great interest among member brokers on the new product and several applications are in the pipeline, NSE sources said.

Commodity traders, too, are looking for new avenues after the government imposed a ban on futures trading on four essential commodities.

Market regulator Forward Markets Commission (FMC) citing government sources, meanwhile, said the ban is likely to be lifted next month.

''I hope that trade in the recently suspended agricultural commodities
can be revived," reports quoted FMC chairman B C Khatua as saying in Bangalore.

The government had, in May, suspended futures trading in soyoil, potato, rubber and chickpea for four months in a bid to bring soaring inflation under control.

The introduction of currency futures follows a circular issued by the Securities and Exchange Board of India (SEBI) on 6 August on exchange traded currency derivatives.

Membership to the NSE's currency derivatives segment is open to all members of NSE, NCDEX and banks. It is also open to all persons desirous of becoming members of the exchange/clearing corporation, subject to their meeting certain requirements and criteria as laid down by SEBI and the exchange.

NSE at present operates three segments:

Wholesale Debt Market: This segment provides a facility, for institutions, banks and their subsidiaries engaged in financial services and bodies corporate, including companies as defined in the Companies Act, 1956, to enter into high value transactions in instruments such as PSU bonds, T-Bills, government securities, units, corporate debentures, etc.

Capital Market: This segment facilitates trade in equities and retail trade in convertible/non-convertible debentures and hybrid instruments.

Futures and Options: This segment facilitates trade in index futures and options and stock futures and options. In the Futures and Options segment, the applicants have the option of taking up either only trading membership of NSEIL and have arrangement with a clearing member for clearing and settlement of their trades or both trading membership of NSEIL as well as self clearing/clearing membership of NSCCL.

NSE, the first exchange to trade exchange traded funds (ETF) in the country.

NSEIL has also set up National Securities Clearing Corporation Limited (NSCCL) as its wholly owned subsidiary for undertaking the clearing and settlement activities. The applicants for trading membership of Capital Market segment of the exchange, on admission, are compulsorily required to become clearing members of NSCCL to clear and settle the trades done

Trading members of the exchange may appoint authorised persons who are  individuals, registered partnership firms, bodies corporate or companies as defined under the Companies Act, 1956 in the Futures & Options (F&O) segment.

An authorised person may introduce clients to the trading member for whom they may receive remuneration / commission / compensation from the trading member and not from the clients.

The clients introduced by the authorised person will have a direct relationship with the trading member, i.e., the member-constituent agreement, know your client forms, risk disclosure document, etc. shall be executed between the client and the trading member, i.e., the authorised person shall not be allowed to have any trading relationship with the clients.

The trading member shall issue the contract notes and/or bills directly to the client i.e. the authorised person shall not issue contract notes, confirmation memo and/or bills in their name.

The clients introduced by the authorised person would be required to deliver securities and make payments directly in the trade name of the trading member (as appearing on the SEBI registration certificate). Similarly, the trading member shall deliver securities and make payments directly in the name of the clients, NSE said in a website release.