India INX, NSE IFSC launch rupee-USD derivative trading

Two exchanges at International Financial Services Centre in Gift City, India INX and NSE IFSC, on Friday launched trading in rupee-USD derivative contracts to enable participants to hedge, trade and settle in the dollar.

With the launch, trades that have been migrated to other international financial centres will now bring rupee trading home.

Besides, trading of INR-USD futures and options will enable participants to hedge, trade and settle in USD with market rules and ecosystem at GIFT City IFSC that is at par with other global markets.

The launch was done virtually by Finance Minister Nirmala Sitharaman, where she rang the bell electronically and declared Rupee-Dollar Futures and Options contract open for trading on India INX and NSE IFSC, both exchanges said in separate statements.

We welcome today's launch of rupee-dollar trading from the International Exchanges at GIFT IFSC. This new reform will enable India to become a net exporter of financial services, being in sync with the vision of GIFT City as a platform for onshoring financial services business, presently being lost to other financial centres across the world, said Tapan Ray, MD and Group CEO at GIFT City.

India INX Chairman Ashishkumar Chauhan said the launch of INR-USD contracts is a great initiative to onshore the offshore rupee-dollar markets.

Introduction of rupee derivatives in IFSC is crucial for the development of Indian financial markets. Rupee derivatives in IFSC would help in creating a vibrant forex market in India.

"This will also play an important role to bring offshore rupee market back to India and strengthen price discovery in Indian markets, NSE MD and CEO Vikram Limaye said.

The move comes after Sitharaman in her budget speech said that in recent years, there has been a surge in trading volumes of the Indian rupee in the offshore financial centres.

The government and the RBI have taken various measures to permit rupee derivatives to be traded in the International Financial Services Centre at GIFT city, Gujarat," she had added.

IFSC platform offers access for the international investors and non-resident participants who currently participate in INR trading in various offshore markets and shall offer such participants, an additional trading venue at par with the other offshore market platforms.

Long trading hours and USD settlement at IFSC would also help to improve access for overseas participants. This will, in turn, help these participants in hedging their rupee exposures effectively at IFSC.

NSE IFSC Clearing Corporation (NICCL) would provide counter-party settlement guarantee for the trades executed on NSE IFSC Ltd.

The major participants in rupee derivatives contracts at NSE IFSC would include Foreign Portfolio Investors (FPI), Corporations, IFSC Banking Units (IBUs) trading members, Global banks & custodian and Non-Resident Indians.

India INX and NSE IFSC are based in IFSC at Gujarat International Finance Tec-City.