Sebi, Reserve Bank weigh extending timings of currency derivatives trading

MUMBAI: India’s market regulators are in talks to extend timings of currency derivatives trading, two people aware of the discussions said, a move expected to help investors hedge their currency risks better.

Currency derivatives trading in India now starts at 9am, offering futures and options contracts in dollar-rupee, euro-rupee, pound-rupee, yen-rupee, T-bills and interest rate futures, and closes at 5pm. Trading in crosscurrency derivatives such as euro-dollar, pound-dollar and dollar-yen is open until 7.30pm. The Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) are in discussions to extend these timings to 9.30pm and 11.30pm respectively.

“Longer trading hours should help clients better in hedging their risks arising from investments or transactions made in foreign currency denominations. If there is any major global event outside India or even any domestic event, which may potentially affect the economy or exports or investments, longer market timings will allow companies to take the required action for minimizing the risk by buying or selling currency derivatives contracts,” said the first person.

Rupee is now listed on four overseas exchanges: Dubai Gold and Commodities Exchange (DGCX), Singapore Exchange Ltd (SGX), Intercontinental Exchange (ICE) and Chicago Mercantile Exchange (CME). Volumes and open interest positions in rupee derivatives in these exchanges typically rise after the close of Indian market, indicating the migration of such trades overseas. The move aims to lure investors, especially foreign portfolio investors (FPIS), away from overthe-counter (OTC) market and foreign exchanges, and choose Indian exchanges instead.

“The timing can be up to 9.30pm for rupee-based pairs and up to 11.30pm for cross-currency pairs. The commodity derivatives market is open till 11.30pm and the regulators or exchanges have not faced any problem in managing it,” the first person said.