A new beginning for the Exchange Traded Derivatives was marked with the addition of new asset class of Currency, on August 29, 2008. National Stock Exchange of India (NSE) launched the Exchange Traded Currency Derivatives Segment with launch of Futures on currency spot rate US Dollar – Indian Rupee. The first day of trading witnessed trading of 65,798 contracts worth Rs 291 crores with participation from more than 150 trading members including Banks.
Exchange traded currency derivatives have served as a viable mechanism for price discovery for different types of market participants with currency exposures, particularly for those who are looking for competitive FX pricing. The presence of a clearing corporation has eliminated counterparty guarantee credit risk. Further, settlement of daily mark to market obligations has reduced the scope for building up of mark to market losses in the books of participants.
In the 15 years journey, close to 20 billion contracts worth Rs 609 trillion have transacted on the exchange. In last 10 years, the number of contracts traded have increased by 7 times from daily average contracts traded of 2.7 million in FY14 to 19.2 million in FY23. During the same period, turnover has increased by 3.4 times from a daily average turnover of Rs 120 billion in FY14 to Rs 414 billion in FY23.
NSE now offers currency futures and currency options on 7 currency pairs namely the 4 Indian Rupee pairs – US Dollar – Indian Rupee (USDINR), Euro – Indian Rupee (EURINR), Japanese Yen – Indian Rupee (JPYINR), Pound Sterling – Indian Rupee (GBPINR) and 3 USD pairs – Euro – US Dollar (EURUSD) Pound Sterling – US Dollar (GBPUSD) and US Dollar – Japanese Yen (USDJPY).
The currency futures and options witnessed participation from over 425 trading members including banks and 4.7 lakh clients. While USDINR currency pair continue to be the top traded currency on the exchanges, its contribution to turnover has declined to below 80% in the current fiscal year.
The USDINR Futures contracts as well USDINR Option contract on NSE is globally the largest contract in the respective category based on number of contracts traded in calendar year 2022, based on statistics published by Futures Industry Association (FIA), a derivatives trade body.
On this momentous occasion, Shri Sriram Krishnan, Chief Business Development Officer, NSE said, “I take this opportunity to thank Government of India, Securities Exchange Board of India, Reserve Bank of India, Financial Benchmarks India Ltd, trading members, investors, industry associations and all other stakeholders. The success of currency derivatives is a culmination of the collaborative effort of all the stakeholders. NSE will continue to make efforts on its part for development of currency derivatives segment. I urge all the stakeholders to continue to provide us with their valuable feedback, suggestions, and guidance as always and embark in the journey of market development.”
