India adds euro, yen, pound to futures trade basket

The Securities and Exchange Board of India today permitted stock exchanges to introduce currency futures in three more currencies – the euro, the yen and the pound sterling. The move was previously approved by the Reserve Bank of India.

The market regulator said in a circular to the exchanges, ''It has now been decided to permit eligible stock exchanges to introduce currency futures on euro-rupee, pound sterling-rupee and Japanese yen-rupee.''

SEBI has also decided to modify the calendar spread margin to be applied on dollar-rupee contracts. Under the new modalities, the exchanges can launch these products as soon as they want.

The contract size for euro-rupee and pound-rupee would be 1000 euros and 1000 pounds respectively. The contract size for yen-rupee has been fixed at 100,000. All the new contracts would be quoted in rupee terms, while the outstanding positions would be in the respective foreign currency terms.

The maximum maturity of the contract would be 12 months, while all monthly maturities from 1 to 12 months would be made available. The contracts would be settled in cash in rupees. The client-level position limit has been capped at 6 per cent of the total open interest position.

Exchange-traded currency derivatives made their debut in India in August 2008, and have registered an impressive rise in volumes since then. The combined daily turnover on the NSE and MCX-SX has already risen to over Rs30,000 crore ($6.5 billion) this month, from a mere Rs2,000 crore (around $450 million) in January last year. So far, only rupee-dollar futures have been available for trading.