New Delhi: MCX Stock Exchange (MCX-SX) will launch live trading in Currency Options in dollar-rupee pair from Friday.
"MCX-SX will commence live trading in Currency Options from Friday, August 10, 2012," it said in a statement yesterday.
The move comes after MCX-SX received approvals from market regulator Securities and Exchange Board of India (SEBI) and the Reserve Bank of India.
The exchange would expand its offerings in the Currency Derivatives Segment (CDS) by introducing Currency Options in the Dollar-Indian Rupee (USD-INR) currency pair.
The exchange had completed four successful mock trading sessions from August 4 to August 8.
Currency Options are contracts that grant the buyer of the option the right, but not the obligation, to buy or sell the underlying currency at a specified exchange rate during a specified period.
For this right, the buyer pays premium to the seller of the option. Currency futures contracts in US Dollar-Indian Rupee, Euro-Indian Rupee, Japanese Yen-Indian Rupee and British Pound-Indian Rupee pairs are already traded on MCX-SX.
The contracts would settle on RBI reference rates. The market timings would be from 0900 hrs to 1700 hrs from Monday to Friday.
Commenting on the development, Joseph Massey MD and CEO at MCX-SX said, "The innovation in Currency Options contract is in line with our philosophy to introduce products based on a consultative process with industry and feedback from market participants."
"The differentiation introduced in Currency Options will offer the most efficient product for our participants. This product completes the spectrum of hedging instruments available on the MCX-SX currency segment and adds further efficiency to risk mitigation mechanism in USDINR," he added.
MCX-SX, whose application for a full-fledged stock exchange was approved by SEBI last month, currently offers trading in only currency futures.
It has witnessed a steady and significant growth in currency futures turnover and open interest and continued to maintain its leadership in currency futures with a market share of 43.57 percent in the last fiscal (FY11-12).
The average daily turnover has increased from Rs 324.78 crore during its first month of operations to Rs 13,530.47 crore at the end of July 2012.
The MCX-SX currency futures platform is supported by a strong membership base of 751 members and witnesses nationwide participation from 714 towns and cities across India, the exchange said.
The Exchange is used by SMEs, treasury of large corporates (importers and exporters), banks, institutions and individuals involved in forex transactions, among others.
Options would help in transparent price discovery, effective risk management, hedging, trading and creating competitive business environment and cost-effective protection from fluctuation in the forex rates, experts said.
MCX-SX launched currency futures trading in USD-INR contracts in October, 2008, while it launched trading in three new currency pairs in January, 2010.
With PTI Inputs
First Published: Friday, August 10, 2012, 09:30