Bourses post 28 per cent drop in currency derivatives turnover in October

The combined currency derivatives turnover on three bourses - National Stock Exchange, MCX-SX and United Stock Exchange - fell by 28 per cent to Rs 3.61 lakh crore in October.

NSE and MCX-SX logged their fourth straight monthly decline in this segment in the current fiscal year (FY14).

The three bourses together had recorded a currency derivative turnover of little over Rs 5 lakh crore in September, 2013, data from market regulator Securities and Exchange Board of India (Sebi) showed.

Of the three exchanges only USE witnessed an increase in its currency derivative turnover in October, while NSE and MCX-SX saw turnover fall to their lowest level since April.

Moreover, currency derivative turnover on the NSE and MCX-SX has been on the decline since July, on the back of Sebi's move to tighten the exposure limits for currency derivatives to check large scale speculation in the capital market and help government stem fall in rupee value.

The volume of currency derivatives trading on the three stock exchanges also plunged by nearly 25 per cent to 5.65 crore as against 7.53 crore in September, 2013.

Individually, the monthly turnover at NSE fell by 27.1 per cent to Rs 2.21 lakh crore in October as compared to Rs 3 lakh crore in September 2013, the market regulator said.

The number of currency derivative contracts on NSE fell to 3.48 crore in October from 4.56 crore in September.     

The monthly turnover of currency derivatives on MCX-SX decreased by 33.6 per cent to Rs 1.18 lakh crore in October from Rs 1.78 lakh crore in September. Little over 1.84 crore contracts were traded on MCX-SX in October as against 2.68 crore in September.

USE's currency derivative turnover stood at Rs 21,242 crore in October, up 7.3 per cent from the previous month. The volumes of contracts on USE rose by 14 per cent to 32.24 lakh on the exchange.

Since July 11, 2013, the exposure to all currency contracts for a broker had been capped at 15 per cent of their overall exposure or $50 million, whichever is lower.

For clients, this cap is 6 per cent, or $10 million, whichever is lower.

Currency derivative contracts allow investors to take position on change in the foreign exchange rates between pairs of two currencies, such as rupee and dollar.