BSE to introduce currency trading from May

The Bombay Stock Exchange (BSE) was set to start trading in currency derivatives by the first week of May after getting the Securities and Exchange Board of India’s (Sebi’s) approval, said a source familiar with the development.

The exchange would be a late entrant into the segment. The National Stock Exchange (NSE) and the MCX Stock Exchange (MCX-SX) started currency trading over a year ago. The move will provide BSE another chance to operate in the domestic derivatives market, where NSE has cornered a lion’s share. NSE has a near-monopoly in equity derivatives and is the only exchange offering interest rates futures trading.

BSE will launch currency derivatives through its newly-launched subsidiary, the United Stock Exchange (USE). BSE holds 15 per cent stake in USE, while the rest is held by 29 other investors, including 11 banks, MMTC and Jaypee Capital.

The Sebi approval has come with a rider that Jaypee Capital will have to bring down its holding in USE from 15 per cent to 5 per cent in the next six months to meet the de-mutualisation norms. According to the norms, there can be only one anchor investor in a stock exchange which can hold up to 15 per cent stake.

However, BSE’s plan to launch interest rate futures is subject to regulatory approvals. MCX-SX is also awaiting Sebi nod, as it is yet to complete de-mutualisation.

Currently, Sebi allows exchanges to offer four currency pairs for trading, including dollar-rupee, euro-rupee, pound rupee and yen-rupee. While BSE Managing Director and Chief Executive Officer Madhu Kannan could not be reached for comment, sources said the exchange would offer all four currency pairs for trading.