This approval will enable the exchange to expand its offerings in the Currency Derivatives Segment (CDS) by introducing Currency Options in the Dollar-Indian Rupee (USD-INR) currency pair.
The Exchange held a successful mock trading session on Saturday, August 4, 2012 and will soon announce the date of live trading of Currency Options.
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.
However, currency futures contracts in USDINR, EURINR, JPYINR and GBPINR pairs are already traded on MCX-SX
The Exchange has witnessed a steady and significant growth in currency futures turnover and open interest. MCX-SX continued to maintain its leadership in currency futures with a market share of 43.57% 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.
Commenting on the latest development Mr. Joseph Massey, MD&CEO, MCX-SX, said, "We thank SEBI and RBI for allowing us to introduce Currency Options on our exchange. Options have the comparative advantage of maintaining a certain degree of flexibility in hedging. Introduction of 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. "