NSE introduces trading of weekly futures and options contracts on EUR-INR, GBP-INR and JPY-INR currency pairs
NSE currently offers cash settled futures
Mumbai: National Stock Exchange of India (NSE), the world’s No 1 derivatives exchange in the year 2019 based on contracts traded, has launched weekly futures and options contracts on the EUR-INR, GBP-INR and JPY-INR currency pairs in the currency derivatives segment from December 7, 2020.
Eleven serial weekly contracts expiring on Fridays are being made available, excluding the expiry week wherein monthly contracts will expire on that Friday. The underlying, contract size, tick size, quotation, strike scheme and trading hours remain the same. The final settlement prices are exchange rates for relevant currency pairs published by the Financial Benchmarks India Pvt. Ltd. (FBIL).
On the occasion, NSE MD & CEO Vikram Limaye said: “NSE is launching a weekly futures contract for the first time, while we have already seen market acceptance in weekly options contracts across asset classes. The weekly derivatives on currency pairs apart from reducing time related costs, will also help market participants to hedge their currency exposure from short-term market movements.”
NSE currently offers cash settled futures and options on 4 FYCINR pairs - USD-INR, EUR-INR, GBP-INR and JPY-INR and 3 cross currency pairs – EUR-USD, GBP-USD and USD-JPY. The contract cycle available is 12 serial monthly contracts in futures and 3 serial monthly contracts followed by 3 quarterly contracts of the cycle March/June/September/December in options.
With multiple developments in the global market and uncertainties due to the ongoing pandemic etc. unfolding this year, there has been a need felt for exchanges to make available a wider product suite to match needs of investors and hedgers. Non-USD currency pairs have been witnessing good increase in daily turnover - Average daily turnover in Euro– Indian Rupee (EUR-INR) currency pair increased by 140% from Rs. 700 crores in FY20 to Rs. 1,681 crores in FY21. The Pound Sterling – Indian Rupee (GBP-INR) pair has also witnessed an increase in daily average turnover by 74% from Rs. 1,537 crores in FY20 to Rs. 2,676 crores in FY21 while the Japanese Yen – Indian Rupee (JPY-INR) pair by 41% from Rs. 311 crores in FY20 to Rs. 439 crores in FY21.
With the launch of weekly derivatives in these currency pairs, participants will be able to manage their exposures more efficiently in a market with tight bid-ask spreads as compared to the OTC markets.