MCX-SX gears up to commence trading in currency options

MCX Stock Exchange (MCX-SX) today said it has become the country's first exchange to conduct mock sessions to test the currency options trading platform.

The Exchange successfully completed two mock trading sessions in 'Currency Options' on July 31 and August 7, respectively, with the third session scheduled for Saturday, MCX-SX said in a statement here.

Having completed all operational compliances for starting this segment, MCX-SX is now well-prepared to launch currency options trading and is awaiting the approval from market regulator the Securities and Exchange Board of India (Sebi).

The exchange-traded currency derivatives products are jointly regulated by the Reserve Bank of India and Sebi. In July, the regulator had allowed exchanges to introduce currency options in the US dollar/Indian rupee pair.

The first mock trading by MCX-SX was held on July 31, which saw a huge amount of trading volume in both Futures and Options contracts with a turnover of approximately Rs 34,000-crore, of which almost Rs 12,000-crore was in currency options. The mock trading sessions have drawn in participation from almost 300 members, including banks, it said.

Currency options instruments will provide an additional tool for participants like banks, corporates (including SMEs and MSMEs) and individuals for hedging their risks arising out of volatile foreign exchange prices.

"We have received an overwhelming response for mock trades. This shows the amount of expectation the market has from this new product and portends well about the future prospects of the currency option market in India. On our part, MCX-SX has already complied all the operational compliances required to commence currency options and we have applied to Sebi for permission to start this segment," MCX-SX's Executive Director U Venkataraman said.