BSE gets SEBI nod for cross-currency derivatives trade

Stock exchange major BSE on Wednesday said it has received approval from the market regulator Securities and Exchange Board of India (SEBI) to trade in multiple cross-currency derivatives with effect from February 28.

"BSE has received SEBI approval for introducing cross-currency derivatives (future and options) on pairs such as euro (EUR)-US dollar (USD), pound sterling (GBP)-USD and USD-Japanese yen (JPY)," the Bombay Stock Exchange (BSE) said in a statement.

The stock exchange said it has also received permission to introduce options on euro-rupee (EUR-INR), pound sterling-rupee (GBP-INR) and Japanese yen-rupee (JPY-INR), in addition to the existing dollar-rupee (USD-INR) options.

According to the statement, the regulator has also allowed trading in cross-currency derivatives contracts for a longer period between 9 a.m and 7.30 p.m.

"The introduction of new products will allow entities like corporates, foreign portfolio investors and non-resident Indians to participate and to take positions in the exchange-traded currency derivatives markets," said Ashishkumar Chauhan, MD and CEO, BSE.

"Besides, a longer trading session will enable market participants to capture key global events in pricing which they otherwise lose out," he said.

Until now, futures contracts were available only for currency pairs that had the rupee as one leg, and an options contract for only a single currency pair -- dollar-rupee.

"For futures contracts in cross-currencies, 12 standardised monthly contracts will be made available to investors and the contracts will be settled in cash (rupees)," the BSE statement said.

"In options contracts, three serial monthly contracts followed by three quarterly contracts will be launched," it added.

The BSE said the last trading day for the contracts shall be two working days prior to the last working day of the expiry month at 12.30 p.m.

"The final settlement price of the cross-currency derivatives contracts shall be computed using the Reserve Bank of India (RBI) reference rate for USD-INR and the corresponding exchange rate published by RBI for EUR-INR, GBP-INR and JPY-INR, as applicable, on the last trading day of the contract," the BSE added.

--IANS

ppg/nir