Commodity OnlineMUMBAI: Two weeks after the Reserve Bank of India issued guidelines for currency futures trading, the country's stock and commodity exchanges are competing with each other to launch futures in the Indian Rupee.
The Ahmedabad-based National Multi Commodity Exchange (NMCE) said on Sunday that the bourse is setting up a new company to start futures trading in currency.
Already, leading commodity exchange MCX and stock exchanges BSE and NSE have already applied for approval to start currency futures trading.
NMCE Director Sudip Bandopadhyay said that the exchange has already started the proceedures for setting up a new company for trading in currency futures derivatives.
Bandopadhyay, who is the chief executive officer of Reliance Money, was inducted into the board of directors of NMCE after the Anil Ambani-led Reliance bought 26% stake in NMCE.
He said the exchange is also talking to a number of state-run banks for acting as co-promoters in the new company to trade in currency futures.
“The new company will be jointly promoted by NMCE and Reliance Money and will also have a clutch of banks as other promoters,” Bandopadhyay added.
According to the RBI guidelines, the membership of the currency futures market will be separate from that of the equity derivatives segment.
Only US dollar-rupee contracts with a size of $1,000 (Rs42,000) each will be allowed for trading. The contracts will be quoted and settled in the local currency with a maturity of not more than 12 months.
The membership of the currency futures market of an exchange will be separate from the membership of the equity derivatives segment or the cash segment. Such an exchange will be subject to the guidelines of the capital market regulator.
Only a resident of India can participate in the trading and no other agency, including banks, can participate in the futures market without getting the approval of its concerned regulator.
A bank can become a trading or a clearing member of such an exchange provided it has capital and reserves worth Rs500 crore, 10% capital adequacy ratio, 3% or less net non-performing assets and has a three-year profit record.
The limit on the gross open positions of a trader in such contracts should not exceed $25 million or 15% of the total open interest, or total number of open contracts. For banks, however, the gross open position limit is $100 million, or 15% of the total open interest.
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