BSE gets in-principle approval for currency derivatives

Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Bombay Stock Exchange (BSE) received in-principle approval from Securities and Exchange Board of India (SEBI) for setting up of an Exchange Traded Currency Derivatives Segment (CDS). This is in accordance with the recommendations laid down in the Report of the RBI-SEBI Standing Technical Committee on Exchange Traded Currency Futures, released by RBI & SEBI on May 29, 2008.

BSE will soon announce the formal launch date of B$€-CDX.

Recognizing that the worldwide average daily turnover in Exchange Traded Currency Derivatives has grown at a CAGR of approximately 23.2% as compared to the CAGR of 10.3% in the OTC Currency Derivatives market (the domestic OTC volume in Currency Derivatives is approximately US $34 billion per day), BSE is exploring strategic arrangements with certain established entities in the forex market. This, it is expected, would lend reach, domain expertise and an active participation to this evolving segment.

The Exchange Traded Currency Futures (ETCF) contracts facilitates easy access, increased transparency, much needed efficient price discovery; enable better counterparty credit risk management, wider participation, trading of a standardised product and reduced transaction costs.

Currently, institutions like Banks, Insurance Companies, Corporates, SEBI Registered Brokers, Mutual Funds, participants in bullion markets and Individuals etc. are among those eligible for trading. To facilitate active participation from there categories and provide impetus to promote this new segment, 'BSE has offered easy terms'.