SEBI to allow more currency derivatives: Bhave
17 April 2010
Securities and Exchange Board of India (SEBI) chairman C B Bhave said yesterday said that the market watchdog is planning to introduce more currency derivatives products, beginning with options, to give a wider choice to investors.
"We will look into other kinds of derivatives (in currency trading) - options to begin with - in order to offer increased products that are available," Bhave said at a CII conference on Indian financial markets in Singapore.
Currency options is a derivative instrument which gives the owner the right, but not the obligation, to exchange money denominated in one currency for another currency at a pre-agreed exchange rate on a specified date.
Bhave said SEBI had launched currency derivatives in India in August 2008, a month before the global financial crisis hit the world. "Today, currency volumes on any given day are in the range of $6-7 billion, and this is when only one pair was allowed three months back and just in futures," Bhave said. The currency futures were limited to rupee-dollars only, but were later extended to other pairs.
Referring to the recently filed prospectus for Indian Depository Receipts (IDR) by Standard Chartered Bank, Bhave said the regulator wants to encourage foreign companies to come and list on Indian stock exchanges in the form of IDRs. "We will look at this experiment eagerly, because it will tell us how efficient our markets are," he said.
Bhave said that equal treatment for different classes of investors and efficiency in markets is very high on his agenda.