New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has given approval to National Stock Exchange (NSE) and United Stock Exchange (USE) for trading in currency options, a move that will provide an alternative to investors for hedging against currency fluctuations, reports PTI.
Both the exchanges have been granted approval for trading in options on dollar-rupee pair.
Market watchdog SEBI gave its approval on 11th October, USE said in a statement. NSE officials, too, confirmed receiving the approval.
Currency option is a derivative instrument that gives the owner the right, but not the obligation, to exchange money denominated in one currency into another at a pre-agreed exchange rate on a specified date.
NSE officials said trading in currency options is likely to start within 10 days, after all the approvals are in place.
At present, futures trading in four currency pairs are being offered through the exchanges. These pairs are dollar-rupee, euro-rupee, yen-rupee and pound-rupee.
In July this year, SEBI allowed bourses to introduce currency options on the US dollar pairing with the rupee.
In August 2008, the market regulator allowed exchanges to introduce currency futures, a forex derivative contract to buy or sell one currency against other on a specified future date, at a price decided in the contract.
Initially, currency futures were limited to rupee-dollar only. But in January 2010, it was extended to three more currencies - the euro, the British pound sterling and the Japanese yen - pairing with the rupee.
The Reserve Bank of India (RBI) and SEBI jointly regulate these products. While the RBI approves the products, SEBI decides on the trading platforms.
Worldwide, the currency derivatives market is bigger than the equities market.
Experts believe that there are greater prospects for growth in currency segment in India, which is a fraction of the size of the equity markets here.
USE started its operations on 20th September by offering trading in currency futures.
Construction and engineering company Jaiprakash Associates Ltd said it signed an agreement with Dighi Port to set up a three million tonne per annum cement grinding plant at Kutch at an investment of around Rs600 crore.
Apart from setting up a cement plant, the company will also build a coal-based captive power plant and a water desalination plant at Dighi Port. The total cost of the project is Rs600 crore.
On Tuesday, Jaiprakash Associates shares ended 1.9% down at Rs129 on the Bombay Stock Exchange, while the benchmark Sensex closed 0.7% down at 20,203 points.
Power utility company Kalpataru Power Transmission Ltd said it will buy 20% stake in its subsidiary company JMC Projects (India) Ltd, at Rs207 a share, in cash.
Kalpataru Power proposes to buy 52.8 lakh shares representing 20.2% of the post preferential issue paid up capital consisting of 20% of the emerging voting capital of JMC Projects, Kalpataru said in filing with the Bombay Stock Exchange (BSE).
The offer will open for subscription on 29 November 2010 and close on 10 December 2010, the filing said. Collins Stewart Inga Pvt Ltd is manager to the offer.
On Tuesday, Kalpataru Power shares declined 1.1% to Rs185 on the BSE. JMC Projects shares also ended 1.8% down at Rs205. While, the benchmark Sensex closed 0.7% down at 20,203 points.