Exchange-traded futures to be in currency next quarter: SEBI

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Corporate houses and investors will be able to trade in currency futures at exchanges in three months. Capital market regulator Securities & Exchange Board of India (Sebi) said here on Tuesday it was working with the Reserve Bank of India (RBI) to help companies and investors hedge their currency risks by introducing exchange-traded currency futures.

Sebi chairman C B Bhave said the next priority was introducing interest rate derivatives, in line with the regulator’s intention to let market participants offer as many products as possible.

Sebi is also working on providing a trading platform for small and medium enterprises (SME), Mr Bhave said addressing a meeting of industry body Assocham.

Exchange-traded currency futures will provide a hedging option in the currency market. The move comes in the backdrop of a sharp volatility the rupee has witnessed by rising to a three-decade high last year and weakening to a 13-month low in 2008.


A Sebi-RBI panel set up to advise on the futures had recommended introduction of currency futures market, initially for dollar-rupee contract, to enable investors manage volatility in the currency market.

The committee had suggested the minimum size of the currency futures contract at the introduction should be $1,000. The government allows trading in currency derivatives, including forwards and options, that are contracts bought and sold on demand and not traded on exchanges. The Sebi chairman said the regulator will also start working on interest rate derivatives.

Small and medium size companies can hope to raise capital from the market without going through the rigorous compliance requirements that bigger companies have to.

“We also have to see that we give access to markets. There are a variety of issuers in the country. It cannot be that there are only top 500 companies in the country.

Therefore, the next thing that’s engaging our mind is creation of an exchange for small and medium enterprises,” the chairman said. Sebi also ruled out relaxing curbs imposed last year on participatory notes, a derivative tool that enables unregistered foreign investors to invest in stock markets.

“Sebi has notified the regulations that arose out of October decisions,” Mr Bhave told reporters when asked if there was a proposal to amend the regulations on participatory notes.