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NSE Introduced USD-INR Currency trading in INDIA

Saturday, December 4, 2010 | | |


National Stock Exchange intoduced new instrument for trading for trader, it will be proved as new way to earn money for trader in India. This gift of Currency trading is announced by National Stock Exchange. This option trading done on hedging against currency fluctuations. This become alternative for secuity or equity trading in future. As per my view it will not alternative ,but become more supportive to all other type of instrument like equity, secuity option, future and also commodity.

Some important points are write by econmics times given below for your understanding without detoriote it's word and meaning;

A derivative instrument, 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. "To begin with the exchanges shall offer three consecutive monthly contracts and 1 quarterly contract. New contracts shall be issued on expiration of an existing month contract," the NSE added. According to the bourse, USD-INR options contracts shall expire at 12 noon, two working days prior to the last business day of the expiry month. The Reserve Bank of India and Sebi jointly regulate these products. While RBI approves the products, Sebi decides on the trading platforms. Worldwide, the currency derivatives market is bigger than the equities market. Earlier this month, Sebi gave its nod to the NSE and the BSE- backed United Stock Exchange for starting trade in currency options, but another bourse MCX-SX blamed the market regulator for discrimination against it, saying thet it was yet to get the approval. At present, futures trading in four currency pairs is being offered through the exchanges. These pairs are Dollar- Rupee, Euro- Rupee, Yen-Rupee and Pound-Rupee. In July this year, Sebi allowed bourses to introduce currency options on the US dollar pairing with the rupee. Two year ago, the market regulator allowed exchanges to introduce currency futures, a forex derivative contract to buy or sell one currency against other on a specified future date, at a price decided in the contract. Initially, currency futures were limited to rupee-dollar only. But in January 2010, it was extended to three more currencies--the euro, the British pound sterling and the Japanese yen--pairing with the rupee.

I am happy wiyh this new product offered by NSE. I think this is step of our financial sector as well as our economy to go on globe with strength. This helps Indian industry to hedge currency on local exchange. This will help big institute as well as small industry.

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