India's first currency futures trading platform will go live on August 29. On Wednesday, the National Stock Exchange (NSE) conducted the first mock trading on its foreign currency derivatives segment with more than 300 members participating, a release from the exchange said. NSE officials said participation was ‘very active' with some of the banks also participating in the mock trading. NSE is the first exchange in India to have received regulatory approval for starting forex derivatives trading in India. Two other entities - Multi Commodities Exchange (MCX) and Bombay Stock Exchange (BSE)- are also at different stages of getting regulatory approvals for starting their own platforms. Other than big banks, exporters, importers and financial institutions, NSE's online currency trading platform would also allow retail investors access to trade as well as hedge foreign currencies through the member-brokers. So far, trading in foreign exchanges in India was limited to banks and companies having foreign currency exposure. To start with, according to the RBI-Sebi panel recommendations, NSE would allow trading only in futures on dollar-rupee contracts. And each contract would be of $1,000, convertible to equivalent Indian rupee. NSE officials said about 70-80% of its 1,000 members had shown interest to become members in NSE's currency trading platform. Besides, a large number of banks and corporates have also shown interest to participate in exchange traded currency futures, an NSE official said. The daily turnover in the foreign currency market in India, where only spot and forward trades are allowed in the Over The Counter (OTC) format, is about $34 billion. With the currency derivatives trading set to launch next week, NSE expects OTC as well as the new market would co-exist.
BY VIVEK MITTAL
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