With the rupee strengthening against the dollar, there has been interest from businesses in stronger economies, especially those involved in imports and exports, Morris said.
DGCX plans new initiatives to improve trading
MUMBAI: Even as the Reserve Bank of India is in the process of finalising guidelines to introduce currency futures in the domestic stock markets, the Dubai Gold and Commodities Exchange (DGCX) is trying to fix liquidity issues dogging rupee futures trade on the bourse since launch on June 7, 2007.
“We would be announcing new initiatives for rupee futures in a month,” said Malcom Wall Morris, CEO of DGCX.
He did not divulge details, but said the initiatives would be towards addressing liquidity concerns. “Any new product that is introduced takes time to pick up. Same is the case with the INR futures.”
With the rupee strengthening against the dollar, there has been interest from businesses in stronger economies, especially those involved in imports and exports, Morris said.
Multinational banks present in the UAE use the futures traded to hedge their risks as well.
P Krishna Murthy, CEO of financial services division at Dubai-based Al Rostamani Group, said apart from liquidity, delivery, too, is a hurdle in the way of rupee futures.
The futures currently are settled in dollars, which needs to change, aver experts. However, regulations do not permit settlement in rupees currently.
“Once the regulatory aspects are cleared, liquidity problem would be fixed,” said a Dubai broker requesting anonymity.
Even though the RBI has permitted individuals to invest up to $300,000 overseas, the same cannot be used for margin funding.
But the futures market is driven only on margins paid for a contract. Hence individual Indian investors cannot hedge their rupee risk through rupee futures available on DGCX.
However, brokerage houses have been taking advantage of the availability of the futures outside India.
Indian brokerage firms such as JRG Securities, Asit C Mehta and Geojit Securities (along with Middle East brokerage Barjeel) and, more recently, Reliance Money have floated subsidiaries to be members of DGCX and are offering gold and currency futures to their international clients, especially non-resident Indians.
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