MCX-SX to Launch Currency Options From Aug. 10

MCX Stock Exchange (MCX-SX) said it will launch live trading in Currency Options in dollar-rupee pair from Aug. 10, 2012.

"MCX-SX will commence live trading in Currency Options from Friday, August 10, 2012," it said in a statement.

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.

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% 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.