currency futures market in india

1. CURRENCY FUTURES MARKET IN INDIA
At
INDIA INFO LINE LTD, HYDERABAD
By
Sudhansu sekhar patro
Roll no-12m106
Dhruva College Of Management

2. Agenda
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Derivatives
Introduction to currency derivatives
Foreign exchange market
History of currency futures
Currency futures market
Contract specification in currency derivatives
Factors effecting the exchange rate
Clearing and settlement
Trading strategies in currency future
Growth of the currency futures
Conclusion

3. EXECUTIVE SUMMARY
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Risk is the inherent component involved in all financial activities. Everybody tries to reduce the risk as to
the extent of possible with a view to enabling entities to manage the volatility in the currency market.
Currency futures are contracts to buy or sell one currency (only dollar-rupees as of now) against another
at a specified price and date in the futures.
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The main objectives of the study is understand the currency futures market, Growth of the currency
future market and different strategic are using in currency futures. This topic I decided to do this project
under the guidance of my internal guide and external guide at India Info line Ltd.
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The study is mainly from secondary sources of data which include the NSE website and website of the
company. There are no primary sources available in this branch.
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India has a strong presence in the world’s economic activities so a strong need felt by RBI and SEBI to do
something in this area. Hence a working committee has been formed and according to their suggestions
trading in currency futures started in India.
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India info line is a good company which is listed on the NSE and BSE.. The company gives more profit to
the investors. And also gives true advice to investors. So that more people are interested to invest their
money in this company.

4. Company profile
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India info line ltd was originally incorporated on October 18, 1995 as Probity Research and
service Private Limited in Mumbai under the companies Act, 1956.
We became a public limited company on April 28,2000 and the name of the company was
changed to Probity Research and service Limited .The name of the company was changed to
India Infoline.com on May 23, 2000 and later to India Info line Limited on march 23, 2001.
The company is part of India Info line Group. It has pan- India presence through its
distribution network of 607 branches, 151 franchises located in 346 cities. The company also
has a presence in Dubai, New York and Singapore.
India Info line provides a gamut of financial products and services. The company offers
booking services in the Cash and Derivatives segments of the NSE and BSE.
IIFL (Asia) Pte- This subsidiary is engaged in carrying out financial sector activities in other
Asian markets.

5. Products of India info line ltd

6. Objectives
• To understand the currency futures market in India
• To understand the clearing , settlement of currency futures
• To study the strategy of the currency futures market so that
client will benefit.
• To understand the growth of the currency futures

7. Derivatives
• Securitas under the Securitas contract Act,1956 and hence
the trading of derivatives is governed by the regulatory
framework .
• A product whose value is derived from the underlying
asset.
• Underlying asset can be equity, commodity or other asset.
• Has a future settlement date

8. Introduction to the currency derivatives
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A Currency market is a market in which one Currency is traded for another. The Spot
exchange rate refers to the prevailing exchange rate at which a Currency can be bought or
sold for another. The Forward exchange rate refers to the exchange rate for the future
delivery of the underlying Currencies.
A Currency Futures contract, traded on Exchanges, is a standardised version of a Forward
contract. The only difference between a Forward contract and the Futures contract is that
the Forward contract is an over-the-counter (OTC) product. The main advantages of
Currency Futures over Forwards are price transparency, elimination of counter-party credit
risk and greater accessibility for all.
The Futures contract is an agreement to buy or sell the underlying Currency, on a specified
date in the future, and at a specified price. The underlying asset for a Currency Futures
contract is a Currency. The Exchange’s clearing house acts as a central counter-party for all
trades and thus provides a performance guarantee.
Currency Futures can be bought and sold on the Currency Exchanges through members of
the Exchange. MCX-SX, NSE, BSE and USE all offer Currency Futures in India. Before trading,
the investor/trader/speculator needs to open a trading account and deposit the stipulated
cash and/or collaterals with the trading member. The average daily turnover in global Forex
and related markets is trillions of US Dollars.

9. Foreign exchange market
• The foreign exchange market or forex market as it is often called is the market in
which currencies are traded. Currency Trading is the world’s largest market
consisting of almost trillion in daily volume and as investors learn more and
become more interested, the market continues to rapidly grow.
• Forex market the largest market in the world.
• There is no central marketplace for the exchange of currency, but instead the
trading is conducted over-the-counter. Unlike the stock market, this
decentralization of the market allows traders to choose from a number of different
dealers to make trades with and allows for comparison of prices..
• The spot currency market is open twenty-four hours a day, five days a week, with
currencies being traded around the world .

10. History of currency futures
• First currency futures –Chicago Mercantile
Exchange (CME) IN 1972.
• International Monetary market (IMM) lunched
trading in several currency futures on may 16,1972

11. Currency futures in India
• Currency futures trading was started in Mumbai August 29, 2008
• With over 300 trading member including 11 banks registered in the
segments , with nearly 70,000 contracts being traded.
• The first trade on the NSE was by East India Securities Ltd.
• Amongst the banks, HDFC Bank carried out the first trade. was by
Standard Chartered Bank constituting 15,000 contracts. Bank
contributed 40 percent of the total gross volume.
• Traded in NSE,BSE and MCX exchange

12. Contracts specification in currency derivatives

13. Factors effecting the exchange rate
fundamental
Technical
Political

14. Clearing House
• Each exchange has a clearing house
• National securities clearing corporation limited (NSCCL) undertakes
clearing and settlement of all trades executed on the currency
derivatives segments of the NSE.
• In clearing house there are 3 member
• 1. Trading member
• 2. Trading-cum-clearing member
• 3. Professional clearing member
• It also acts as legal counterparty to all trades on the currency
derivatives segment.

15. Modes of settlement in currency futures
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settlement means actual pay in or pay out to settle the contract.
Currency futures contracts have two types of settlement
MTM settlement: T+1
Final settlement : T+2

16. Trading strategic in currency futures

17. Growth of currency futures

18. conclusion
The currency futures give standardized contract to its investors and
individuals who are aware forex market or predict the movement
of exchange rate so they will get the right platform for trading in
currency futures Because of exchange traded futures contracts
and its standardized nature gives the counterparty risk minimized.
Initially only NSE had permission but now BSE and MCX has also
started the currency futures.
Mainly currency futures are using hedging purpose to minimize the
risk. And there are two strategy also used in the currency futures
market one is hedging and speculation .
Actually currency futures not only used by
businessman, exporter, importer but also individual who are
interested having knowledge about forex market then can also
invest in currency futures .