NSE, USE get SEBI nod for currency options trading
12 Oct 2010
The Securities and Exchange Board of India (SEBI) has allowed the National Stock Exchange (NSE) and the United Stock Exchange (USE) to start trading in currency options.
The market regulator has allowed both the exchanges to trade in options on dollar-rupee pairs. The options will be introduced on the dollar-rupee spot rate with 3 `In The Money', 3 `Out of The Money' and 1 `Near The Money' options, a USE release said.
Currency option gives the owner the right, but not the obligation, to exchange money denominated in one currency into another at a pre-agreed exchange rate on a specified date, a move that will provide an alternative to investors for hedging against currency fluctuations.
This will help both corporates and individuals reduce risks as spread rates in an exchange are better and it does not involve any counter party risk.
United Stock Exchange, India's newest exchange for trading in currency derivatives, offers a platform for both corporates and small businesses to manage forex risk.
USE, launched three weeks ago with operations in currency futures reported record trading volume of Rs45,845-crore on the launch day itself.
