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For the first time, the Indian rupee is going to be traded in the global futures market.
Here is a ready reference on everything you need to know about the Indian rupee futures contracts.
Is it the first time that Indian rupee is going to get futures contracts?
Yes. It is the first time in the world that Indian rupee will get traded in the futures market.
Which exchange is launching the Indian rupee futures contract?
The Dubai Gold and Commodities Exchange will list the futures contract on the Indian rupee on June 7. DGCX, the first exchange in the world to trade a rupee derivative, already trades in three currency contracts such as euro/US dollar, pound sterling/US dollar and Japanese yen/US dollar.
The Dubai-based exchange, promoted by India's leading commodity bourse - the Multi-Commodity Exchange - in collaboration with the Dubai Multi Commodity Centre trades in three commodities futures contracts such as gold, silver and fuel oil.
How does the futures in Indian rupee help you?
The Indian rupee contract will enable individuals and companies to have the opportunity to hedge and trade their Indian rupee risk on transparent and equal basis that an exchange provides.
What will each Indian rupee contact represent?
Each DGCX Indian rupee contract represents two million rupees. Prices will be quoted in US cents per 100 Indian rupees, with a minimum price fluctuation of 0.000001 US dollars per Rupee ($2 per contract). At any point in time DGCX will list the current and next two calendar months, plus the next three calendar quarterly months.
What are the trading months now set for?
Five concurrently listed contracts consisting of one near month contract plus March, June, September and December contracts.
What will be price quote?
US$ quoted in cents per 100 Indian rupees (e.g. 244.56 / 244.62 US cents per 100 Indian rupees).
What will be minimum tick size
US$ 0.000001 per INR or $ 2 per tick
What will be the initial margin of the rupee contract?
As determined by the Exchange from time to time using SPAN Margin System. At the outset, minimum initial margin shall be US$1500.
What will be the trading days and hours?
Monday through Friday; 0830 - 2000 hrs Dubai time.
What will be settlement mechanism?
Daily variation margin (mark-to-market) is payable by each member holding open position till expiration date. Open positions at expiry of contract shall be settled in US dollars as per daily settlement price declared by the exchange. Such DSP would be based on the official US dollar reference rate issued by the Reserve Bank of India, based on bank rates in Mumbai at 12 noon on the last day of trading or earliest available date.
Will there be physical settlements?
Yes. The physical settlement shall be completed using Indian rupee contract unit equivalent amount in euros calculated at the settlement price, declared by the exchange for euro futures contract with the same delivery month as the Indian rupee futures contract on the last trading day of that Indian rupee futures contract.