Currency derivatives turnover dip 42% as Sebi tightens norms

NSE, MCX-SX and USE together recorded a turnover of Rs 12.80 lakh cr in June 2013

The currency derivatives turnover on the country's three stock exchanges fell by 42% to Rs 7.42 lakh crore in July, with NSE and MCX-SX witnessing a slump for the first time in the current fiscal.

The three bourses -- NSE, MCX-SX and USE -- together had recorded a turnover of Rs 12.80 lakh crore in June 2013, as per the latest data compiled by market regulator Sebi.

USE had witnessed a fall in its currency derivative turnover in June as well, while NSE and MCX-SX recorded their first monthly decline since April.

The volumes of currency derivatives trading on the three stock exchanges also plunged by nearly 44% to 12.13 crore in July as against 21.6 crore in June, 2013.

The decline follows market regulator Sebi's move in early July to tighten the exposure limits for currency derivative to check large scale speculations in the market and help government stem fall in rupee value.

Individually, the monthly turnover of currency derivatives at NSE fell by 47.2% to Rs 4.09 lakh crore, from Rs 7.75 lakh crore in June 2013.

The number of currency derivative contracts on NSE nearly halved to Rs 6.70 crore in July from 13.10 crore in June.

The monthly turnover of currency derivatives on MCX-SX decreased by 35.6 percent to Rs 3.10 lakh crore in July 2013. Little over 5 crore contracts were traded on MCX, about three crore less than what was traded in June.

The currency derivative turnover for USE stood at Rs 21,896 crore in July, a drop of 3.1% compared to the previous month. The number of currency contracts on USE declined 7.87% to 35.80 lakh in July.

Since July 11, 2013, the exposure to all currency contracts for a broker had been capped at 15% of their overall exposure or $50 million, whichever is lower.

For clients, this cap is 6%, or $10 million, whichever is lower.

Currency derivative contracts allow investors to take position on change in the foreign exchange rates between pairs of two currencies, such as rupee and dollar.