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Currency Derivatives are Future and Options contracts which you can buy or sell specific quantity of a particular currency pair at a future date. It is similar to the Stock Futures and Options but the underlying happens to be currency pair (i.e. USDINR, EURINR, JPYINR OR GBPINR) instead of Stocks.
For currency futures and options, underlying asset is the currency pair at currency exchange rate. For equity futures, the underlying asset is the equity share of respective company.
Following are the participants in Currency Trading:
All Currency contracts expire two working days prior to the last business day of the expiry month at 12 noon.
In NSE for Currency Derivatives the trade timings are as follows: Trading Session- Monday to Friday
Friday- 9:00 AM to 5:00 PM Intraday Square Off- Monday to Friday – 30 minutes prior to market closure
You can trade in following products in Currency derivatives segment:
1.Carry Forward – You can take both Futures and Options position in this product with margin % charged defined by exchange. The Carry Forward positions are carried forward to next trading day unless you square off the position or the expiry date is reached.
2.Intraday – You can take only Futures position in this product with lower margins, but these positions will have to be necessarily squared off by day end.
You can trade in either of the products in both PIB and Trading website by selecting Product Type in Order entry window.
The system will automatically square off your Currency intraday futures open positions 30 minutes prior to market closure. This timing is subject to change depending on the market conditions on any given day.
Yes, you can convert your Currency F&O position taken on current day from Carry Forward product to Intraday and Vice-versa in Intraday position Report.
The Exchange Traded Currency Derivative market is regulated by SEBI through the recognized stock exchanges. The Foreign Exchange Management Act is the law, which regulates the Foreign Exchange market and the regulatory authority for the Indian Foreign Exchange Market is the Reserve Bank of India (RBI).
All Currency contracts – Futures and Options on NSE are cash-settled.
Generally, Currency futures and options contracts require a margin percentage of the contract value, i.e. defined by exchange. The exchange also requires the daily profits and losses to be paid in/out on open positions (Mark to Market or MTM) so that the buyers and sellers do not carry a risk for not more than one day.
Yes, same margin can be used to trade in both Equity and Currency segment.
Yes, there is a daily price range (DPR) to safeguard the interests of general investors from the extreme volatilities in markets for preventing any unexpected fall or rise beyond a limit. In case price goes beyond the range, the contract is freezed for particular time duration by the exchange and new DPR is given by exchange for respective contract.