ICICIdirect.com introduces online trading in currency derivatives

Hyderabad: ICICIdirect.com, the largest online trading site in India, today announced the launch of trading in currency derivatives on its site, that will enable an avenue to hedge at a low cost and in a transparent manner.

The addition of online trading in currency derivatives will increase the ICICIdirect suite of instruments available for trading and hedging.

Currency risks can be hedged mainly through forwards, futures, swaps and options. Each of these instruments has its role in managing the currency risk. The main advantage of currency futures over its closest substitute product, viz., forwards which are traded over-the-counter (OTC) lies in price transparency, elimination of counterparty credit risk and greater reach in terms of easy accessibility to all.

"The strong correlation that foreign exchange has to interest rates, equity flows and commodities will translate into opportunities to trade currency futures independently or in conjunction with equities," the company said in a media release.

Presently only futures contracts in currency derivatives have been introduced by NSE, and now trading in currency derivatives through ICICIdirect will be offered in futures contracts.

''There is a strong need to hedge currency risk in a transparent and a low cost manner. For the retail customer, it will be one more source of diversification of an asset class," says Anup Bagchi, executive director, ICICI Securities Ltd.