When was it inducted?
Corporations, banks, traders and individuals can hedge their foreignexchange risks, from 29th August, 2008, the date from which the futurecommences on National Stock Exchange. MCX ( Multi Commodity Exchange)has also received in – principle approval from SEBI (Securities and Exchangeboard of India) for launching Currency futures through its subsidiary – MSEX(MCX Stock Exchange Ltd). Many other stock exchanges like BSE ( BombayStock Exchange) is also waiting for approval. The mock trading of currencyfutures has already begun at NSE from 20
Why Is it necessary?
The exchange traded currency derivatives market – with introduction of currency futures - will provide an excellent opportunity to hedge currencyrisk for different kinds of participants. It is also hoped that Currency Optionswill also be introduced as the market stabilizes. Trades done at (NSE)National Stock Exchange are cleared, settled and risk managed by (NSCCL)National Securities Clearing Corporation. NSCCL is set up as a separate andindependent entity whose practices and principles followed are globallybenchmarked. Parents paying for their children education, students raisingfunds for themselves, persons getting remittance from abroad and even out- going travellers can benefit from the scheme.
One buys USD 10000 today and that he requires to meet the travel overseasexpenses two months later at Rs.42.50. He would pay Rs.425000/- . With theopportunity cost for two months (on margin money 5%), this couldeventually work out to Rs 42.70 to the dollar. It will be good if after twomonths the dollar is quoting above Rs 42.70. It depends how one predictsthe movement of currency correctly. For the above requirement, one has tobuy 10 dollar – rupee contracts (each contact equals to USD 1000) of twomonths expiry at say Rs 42.50 to a notional value of Rs. 425000/-, but would