Regulations
MCX-SX gets SEBI, RBI approval for currency options

The approvals would allow MCX-SX to expand its offerings in the currency derivatives segment by introducing currency options in the USD-INR currency pair

 
New Delhi: MCX Stock Exchange (MCX-SX) has said it has received approvals from market watchdog Securities and Exchange Board of India (SEBI) and banking regulator Reserve Bank of India (RBI) to launch Currency Options, reports PTI.
 
These approvals will enable the exchange to expand its offerings in the Currency Derivatives Segment (CDS) by introducing Currency Options in the Dollar-Indian Rupee (USD-INR) currency pair.
 
MCX-SX said it held a successful mock trading session on 4 August 2012 and will soon announce the date of live trading of Currency Options.
 
Currency Options are contracts that grant the buyer of the option the right, but not the obligation, to buy or sell the underlying currency at a specified exchange rate during a specified period.
 
For this right, the buyer pays premium to the seller of the option. Currency futures contracts in US Dollar-Indian Rupee, Euro-Indian Rupee, Japanese Yen-Indian Rupee and British Pound-Indian Rupee pairs are already traded on MCX-SX.
 
MCX-SX, whose application for a full-fledged stock exchange was recently approved by Sebi, currently offers trading in only currency futures.
 
It has witnessed a steady and significant growth in currency futures turnover and open interest and continued to maintain its leadership in currency futures with a market share of 43.57% in the last fiscal (FY11-12).
 
The average daily turnover has increased from Rs324.78 crore during its first month of operations to Rs13,530.47 crore at the end of July 2012.
 
The MCX-SX currency futures platform is supported by a strong membership base of 751 members and witnesses nationwide participation from 714 towns and cities across India, the exchange said.
 
Commenting on the latest development MCX-SX MD and CEO Joseph Massey said: "We thank SEBI and RBI for allowing us to introduce Currency Options on our exchange. Options have the comparative advantage of maintaining a certain degree of flexibility in hedging.
 
"Introduction of this product completes the spectrum of hedging instruments available on the MCX-SX currency segment and adds further efficiency to risk mitigation mechanism in USD-INR".
 
The Exchange is used by SMEs, treasury of large corporates (importers and exporters), banks, institutions and individuals involved in forex transactions, among others.
 
Options would help in transparent price discovery, effective risk management, hedging, trading, creating a competitive business environment and cost-effective protection from fluctuation in the forex rates, experts said.
 
MCX-SX launched currency futures trading in USD-INR contracts in October 2008, while it launched trading in three new currency pairs in January 2010.
 

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Mauritius entities in exit mode; sell shares worth Rs3,000 crore since April

Various Mauritius-based entities have sold shares worth close to Rs3,000 crore, while the total stock purchase made by them since 1 April 2012 amounts to just about Rs600 crore -- translating into a net outflow of over Rs 2,200 crore

 
New Delhi: Mauritius-based entities seem to have gone on a selling spree in the Indian stock market and have off-loaded shares worth about Rs3,000 crore in about 24 companies since the beginning of this fiscal, reports PTI.
 
The companies whose shares have been sold by various Mauritius-based entities, many of which are units of large global investors, include companies like Yes Bank, Axis Bank, Bajaj Hindusthan and state-run MTNL.
 
These shares have been mostly sold through large open market transactions in the past four months.
 
As per the data available with the stock exchanges, various Mauritius-based entities have sold shares worth close to Rs3,000 crore, while the total stock purchase made by them since 1 April 2012 amounts to just about Rs600 crore -- translating into a net outflow of over Rs 2,200 crore.
 
This large-scale selling has come at a time when many Mauritius-based entities have come under the regulatory scanner for possible routing of illicit wealth of Indians and non-resident Indian (NRIs) back into the country.
 
Market regulator, the Securities and Exchange Board of India (SEBI) has come across numerous Mauritius- based funds during its stock-specific probes in cases of market manipulation, as also irregularities related to initial public offerings (IPOs), global depository receipts (GDRs), takeovers and insider trading, sources have said.
 
There are fears that many of the Mauritius funds could be related to each other, as SEBI has found some common threads between different entities based out of the island nation.
 
Mauritius-based entities form a major chunk of foreign investors in the Indian market, but most of them have either stopped infusing fresh money or have been selling their investments in recent months amid fresh taxation proposals.
 
This has further raised the hackles of the regulatory agencies, as the proposed changes in the tax regime are supposed to check flow of black money, among others.
 
The market experts are, however, of the view that the recent sell-off by Mauritius based entities could be just a normal churn in their portfolios.
 
Destimoney Securities' Sudip Bandhopadhyay said that "most of the India-registered FIIs are based in Mauritius and they prefer buying or selling through open market transactions mainly on account of price fluctuation."
 
Notably, Mauritius-based entities of global banking giant HSBC accounted a major part of the recent sell-off. HSBC IRIS Investment Mauritius has offloaded shares worth about Rs1,879 crore in Axis Bank and worth about Rs545 crore in Yes Bank.
 
Besides, HSBC Global Investment Fund Mauritius Ltd has sold shares in Welspun Global Brands.
 
Market experts have attributed HSBC's share sale to mostly its capital-shoring exercise at global level.
 
Among others, Copthall Mauritius Investment has sold shares in firms such as Mahindra & Mahindra Financial Services, Ruchi Soya and Cholamandalam Investment and Finance.
 
Besides, Barclays Capital Mauritius has offloaded shares in companies like Bajaj Hindusthan, IFCI, Welspun, ABG Shipyard and MTNL.
 
Another foreign fund house, Swiss Finance Corp (Mauritius) Ltd has sold shares of Jindal SouthWest Holding Ltd and JM Financial, while Goldman Sachs Investments Mauritius has offloaded shares in companies like IVRCL, OnMobile Global and Subex.
 

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Oil Ministry asks RIL to meet full gas requirement of Dabhol plant

The Ministry in its 31st July order cited an EGoM decision of 24th February to order RIL to supply RGPPL 7.6 mmscmd of gas in full. However, what took the ministry over five months to communicate the decision of the ministerial panel is not clear

 
New Delhi: In a move that will diminish gas supplies to fuel-starved power plants, the Oil Ministry has ordered Reliance Industries Ltd (RIL) to first meet full requirement of Dabhol power plant and distribute any remaining KG-D6 output among other users, reports PTI.
 
Faced with an unanticipated sharp decline in KG-D6 gas production, the government had last year ordered a pro-rata cut in supplies to 25 power plants which had an original allocation of 28.90 million standard cubic metres per day (mmscmd).
 
But there was no cut in the 15.668 mmscmd allocation to 16 fertiliser plants, who were given top priority in gas allocation.
 
Sources said Ratnagiri Gas & Power Pvt Ltd (RGPPL), the firm that now runs the 1,967 MW power plant at Dabhol in Maharashtra, was allocated 7.6 mmscmd of KG-D6 gas. It like other power plants, however, got only 40% of allocated volumes.
 
The Ministry in its 31st July order cited an Empowered Group of Ministers (EGoM) decision of 24th February to order RIL to supply RGPPL 7.6 mmscmd of gas in full, sources said, adding it was not clear what took the ministry over five months to communicate the decision of the ministerial panel.
 
KG-D6 output has fallen to about 29 mmscmd this month, of which just about 12 mmscmd was being supplied to power plants.
 
The supplies to power plant include those to RGPPL.
 
After the Ministry's 31st July order, RGPPL will get 7.6 mmscmd, leaving under 5 mmscmd to be divided among the 24 other power plants.
 
KG-D6 gas output has fallen from 61.5 mmscmd in March 2010 to under 29 mmscmd. Of the current output, over 14 mmscmd is sold to fertiliser plants and about 3 mmscmd goes to LPG extraction plants, leaving 12 mmscmd for power plants.
 
Sources said the EGoM in its meeting on 24th February directed supply of full quota of gas to RGPPL after Power Ministry made a request.
 
Power ministry argued that the beleaguered Dabhol power plant after the exit of its bankrupt owner Enron Corp of US, was granted 'top most priority' in allocation of KG-D6 gas at par with the fertiliser sector by the EGoM while making original allocation on 23 October 2008.
 
Following from that decision, no cut should be made in supplies to RGPPL till cuts for the fertliser sector starts, it had argued.
 
According to the power ministry, substantial cuts in the supply of KG-D6 gas to RGPPL has been observed from November 2011, onwards, despite the fact that no cut has been started for the fertiliser sector till date.
 
Sources said Andhra Pradesh has lodged a strong protest against the RGPPL allocation, claiming that this will hurt power plants in the state, as they are already operating at a lower plant load factor (PLF) of 52% as against the 75% PLF mandated by the EGoM.
 

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