What is currency Futures ?A transferable futures contract that specifiesthe price at which a specified currency can bebought or sold at a future date. Currencyfuture contracts allow investors to hedgeagainst foreign exchange risk.
History of Currency FuturesCurrency futures were first created at the Chicago MercantileExchange (CME) in 1972 International Monetary Market (IMM)launched trading in seven currency futures on May 16 , 1972 .
Currency Futures in INDIA• Currency futures trading was started in Mumbai August 29, 2008.• With over 300 trading members including 11 banks registered in this segment, the first day saw a very lively counter, with nearly 70,000 contracts being traded.• The first trade on the NSE was by East India Securities Ltd Amongst the banks, HDFC Bank carried out the first trade.• The largest trade was by Standard Chartered Bank constituting 15,000 contracts. Banks contributed 40 percent of the total gross volume.
Fundamentals of Indian Currency Futures•Currency futures can be traded between Indian rupees and US dollar•The trading of Indian currency futures can be done between 9 am to 5 pm•The minimum size of currency futures is US$ 1000 periodically the value of thecontract can be changed by RBI and SEBI•The currency future can have maximum validity of 12 months The currencyfutures contract can be settled in cash
Exchanges for Currency TradingExchanges engaged in currency futures in IndiaNSE-Started in Aug, 2008MCX-SX- Started in October, 2008BSE-Started in October, 2008USE-Started in 31st Aut,2010
Importance of Currency Futures?According to market analysts, introduction of currency futures in the Indianmarket will give companies greater flexibility in hedging their underlyingcurrency exposure and will bring in more liquidity into the market as currencyfuture or forex derivative contract will enable a person, a bank or aninstitution to buy or sell a particular currency against the other on a specifiedfuture date, and at a price specified in the contract.
Features?•Only USDINR ,EURINR ,GBPINR and JPYINR contracts areallowed to be traded in NSE , BSE, MCX-SX AND USEExchanges•Standardized contract size - $1000•The contracts quoted and settled in Indian rupees•The maturity of the contracts shall not exceed 12 months•Settled on specified future date called as settlement date•Only resident Indians are allowed to trade in currencyfutures•Future price=Spot Price+Cost of Carry
MarginsMinimum Initial Margin: 1.75% on day 1, 1% thereafterFor Example : USDINR Futures Rate Rs 53.46 X1000 = 53,460On Rs 53.460/- Margin @ 1.75% = 940/- for Day 11% there after = 540/-
Contact SpecificationsSymbol USDINRInstrument Type FUTCURUnit of trading 1 (1 unit denotes 1000 USD)Underlying USDQuotation/Price Quote Rs. per USDTick size 0.25 paise or INR 0.0025Trading hours Monday to Friday 9:00 a.m. to 5:00 p.m.Contract trading cycle 12 month trading cycle.Settlement Daily settlement : T + 1 ,Final settlement : T + 2Mode of settlement Cash settled in Indian Rupees
Contact SpecificationsSymbol EURINRInstrument Type FUTCURUnit of trading 1 (1 unit denotes 1000 EURO)Underlying EUROQuotation/Price Quote Rs. Per EUROTick size 0.25 paise or INR 0.0025Trading hours Monday to Friday 9:00 a.m. to 5:00 p.m.Contract trading cycle 12 month trading cycle.Settlement Daily settlement : T + 1 ,Final settlement : T + 2Mode of settlement Cash settled in Indian Rupees
Contact SpecificationsSymbol GBPINRInstrument Type FUTCURUnit of trading 1 (1 unit denotes 1000 POUND STERLING)Underlying POUND STERLINGQuotation/Price Quote Rs. Per GBPTick size 0.25 paise or INR 0.0025Trading hours Monday to Friday 9:00 a.m. to 5:00 p.m.Contract trading cycle 12 month trading cycle.Settlement Daily settlement : T + 1 ,Final settlement : T + 2Mode of settlement Cash settled in Indian Rupees
Contact SpecificationsSymbol JPYINRInstrument Type FUTCURUnit of trading 1 (1 unit denotes 1000 YEN)Underlying JPYQuotation/Price Quote Rs. Per YENTick size 0.25 paise or INR 0.0025Trading hours Monday to Friday 9:00 a.m. to 5:00 p.m.Contract trading cycle 12 month trading cycle.Settlement Daily settlement : T + 1 ,Final settlement : T + 2Mode of settlement Cash settled in Indian Rupees
ExampleA jeweller who is exporting gold jewellery worth USD 50,000, wants protection againstpossible Indian Rupee appreciation in Dec ’08, i.e. when he receives his payment. He wantsto lock-in the exchange rate for the above transaction. His strategy would be:One USD - INR contract size : USD 1,000Sell 50 USD - INR Dec 08 Contracts (on 15th Jul 08) : 44.6500Buy 50 USD - INR Dec 08 Contracts in Dec 08 : 44.3500Sell USD 50,000 in spot market @ 44.35 in Dec 08 (Assume that initially Indian rupee depreciated , but later appreciated to 44.35 per USD asforeseen by the exporter by end of Dec 08)Profit/Loss from futures (Dec 08 contract) : 50 * 1000 *(44.65 – 44.35) = 0.30 *50 * 1000 = INR 15,000The net receipt in INR for the hedged transaction would be: 50,000 *44.35 + 15,000 = 2,217,500 + 15,000 = 2,232,500.Had he not participated in futures market, he would have got only INR 2,217,500. Thus, he kept his sales unexposedto foreign exchange rate risk.
Growth In Indian Currency FuturesCheck the following table to see the volumes in MCX-SX for USDINR for one week . For more details visitwww.mcx-sx.comTrade Date Total Contacts Total Turnover in9May2012 2970567 Crores 160078May2012 2685667 143077May2012 2612412 139744May2012 2668299 144083May2012 2031501 108912May2012 2084589 1109230Apr2012 1475925 7812
Advantages of Currency TradingTrading Hours 9am to 5pm onlyAccount Opening Charges Nil If client opens Equity account otherwise Rs 100/-Low Margin’s Low as Rs 1000/- Per one LOT of USDINRVolumes Very HighRisk Low RiskTaxes Low Taxes when compare to Equity and CommodityTrading Client can trade in any 4 Exchanges and contact specifications are same in all Exchanges
How to Earn Money from Currency MarketsBy promoting currency trading clients as a Business Associate / Franchisee can get excellent revenue through Brokerage sharing.Getting Client Accounts is easy because of low investment , accounts can be opened with min 1000/- to 2000/- also , so it will easy to get clients first and later on you can train these clients to trade in other segments also and in turn it will lead you for better income
Business Example With an investment of Rs 10,000/- client can buy 10 Lots of USDINR without Exposure. And 30 Lots with Exposure.Clients Buying Selling Turnover per each client subject Number of Trades per day Each Client Each client One trade 2 Trades 3 Trades 4Trades 1 5 Lots 5Lots 5Lakhs 10 Lakhs 15Lakhs 20Lakhs 5 25 Lots 25Lots 25Lakhs 50Lakhs 75 Lakhs 1 Crore 10 50 Lots 50 Lots 50 Lakhs 1 Crore 1.5 crore 2 Crore 50 250 Lots 250 Lots 2.5 Crores 5.00 Crore 7.5 Crore 10 Crore 100 500 Lots 500 Lots 5 Crores 10 Crores 15 Crores 20 CroresAs per Franchisee agreement Business associate will get revenue sharing on Turn Over
How To Get 100 Clients in Just 60 days•Through Local News paper Classified Ads•Through online ad posting•Phamplet distribution directly or through Newspaper•Bulk SMS pushing•E-mail marketing•Appointing Marketing person with attractive Incentive
COME BE A PART OF THE RAPIDLY THE GROWING FRANCHISEE NETWORKWe invite aspiring entrepreneurs, existing Sub-broker/franchisee having strong localpresence, credible track record of client servicing and needful infrastructure to join us asChannel Partner / Business AssociateThe company offers all Stock & Commodity Market products i.e., NSE, BSE, F&O, MCX,NCDEX, Currency Future & Depository Services. Mutual Funds and IPO’s
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