The European style Call & Put Options on USD-INR will have a lot size of US$1,000 per contract and quoted and settled in Indian rupees. Exchange will be introducing three monthly serial contracts followed by one quarterly contract. All outstanding positions of these contracts will be settled on RBI reference rates. The market timings will be from 9.00 am to 5.00 pm from Monday to Friday.
The smaller tick size of 10 bps, which is the specialty of MCX-SX USDINR option contracts, would further ensure better price discovery, increased hedge effectiveness and cost-effective risk management for the spectrum of stakeholders. Additionally, the smaller tick size offers opportunities for ease of entry and exit to the participants and reduced financial impact in situations where market moves against expectations.
Commenting on the development, Mr. Joseph Massey, MD&CEO, MCX-SX, said, “The innovation in Currency Options contract is in line with our philosophy to introduce products based on a consultative process with industry and feedback from market participants. The differentiation introduced in Currency Options will offer the most efficient product for our participants. This product completes the spectrum of hedging instruments available on the MCX-SX currency segment and adds further efficiency to risk mitigation mechanism in USDINR.”
With the introduction of Currency Options, MCX-SX is poised to further extend the benefits of effective risk management, hedging, inventory and cash flow management, treasury to a wider range of stakeholders, including SMEs, large Corporates (importers & exporters), banks, institutions and individuals involved in forex transactions etc.
Currency Futures contracts in USDINR, EURINR, JPYINR and GBPINR pairs are already traded on MCX-SX. The Exchange has recorded a steady growth in turnover and open interest in Currency Futures. The average daily turnover has increased from Rs 324.78 crore during its first month of operations to Rs 13,530.47 crore at the end of July 2012. Its Currency Futures platform is already supported by a strong membership base of 751 members and witnesses nationwide participation from 714 towns and cities across India. MCX-SX has also firmly maintained its leadership this segment with a market share of 43.57% in the last fiscal (FY11-12).
Among other pioneering market development initiatives by MCX-SX include reduction of gap of collections of mark-to-market (MTM) margins, deployment of superior technology for continued operations during sun outage, launch of the Exchange website in 12 languages, SMS and WAP services for Currency Futures price on mobile sets, launch of India’s first handbook and CD on Currency Futures and 1,400 financial literacy programmes till date