Currency Derivatives

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The contract Specification of the futures shall be as under: It supports an order driven market and provides complete Transparency of trading operations. A client of a trading member is required to enter into an agreement with the trading member before commencing trading.

A client is eligible to get all the details of his or her orders and trades from the trading member. A currency futures trading in india nse member must ensure compliance particularly with relation to the following while dealing with clients:. Bring risk factors to the knowledge of client by getting acknowledgement of client on risk disclosure document. The system allows the trading members to enter orders with various conditions attached to them as per their requirements.

These conditions are broadly divided into the following categories:. The maximum brokerage chargeable by a trading member in relation to trades effected in the contracts admitted to dealing on the Currency Derivatives segment of NSE is fixed at 2.

The transaction charges payable to the exchange by the trading member for the trades executed by him on the Currency Derivatives segment would be as prescribed by the Exchange from time to time. The trading members would also contribute to Investor Protection Fund of Currency Derivatives segment at the rate as may be prescribed by the Exchange from time to time.

It also acts as legal counterparty to all trades on the Currency Derivatives segment and guarantees their financial settlement. Currency futures contracts have two currency futures trading in india nse of settlements, the MTM settlement which happens on a continuous basis at the end of each day, and the final settlement which happens on the last trading day of the futures contract.

All futures contracts for each member are marked-to-market MTM to the daily settlement price of the relevant futures contract at the end of each day. Daily settlement price on a trading day is the closing price of the respective futures contracts on such day. The closing price for a futures contract is currently calculated as the last half an hour weighted average price of the contract in the Currency Derivatives Segment of NSE. The final settlement price is the RBI reference rate on the last trading day of the futures contract.

All open positions shall be marked to currency futures trading in india nse on the final settlement price. The salient features of risk containment mechanism on the Currency Derivatives segment are:. The financial soundness of the members is the key to risk management. Therefore, the requirements for membership in terms of capital adequacy net worth, security deposits are quite stringent. It specifies the initial margin requirements for each futures contract on a daily basis.

The CM in turn collects the initial margin from the TMs and their respective clients. The open positions of the members are marked to market based on contract settlement price for each contract. CMs are provided a trading terminal for the purpose of monitoring the open positions of all the TMs clearing and settling through him.

A CM may set limits for a TM clearing and settling through him. A member is alerted of his position to enable him to adjust his position or bring in additional capital.

A separate settlement guarantee fund for this segment has been created out of the capital of members. The most critical component of risk containment mechanism for the Currency Derivatives segment is the margining system and on-line position monitoring. The most critical component of a risk containment mechanism is the online position monitoring and margining system. The actual margining is done on-line, on an intra-day basis using PRISM Parallel Risk Management System which is the real-time position monitoring and risk management system.

These are required to be paid up-front on gross basis at individual client level for client positions and on net basis for proprietary positions. A CM is required to ensure collection of adequate initial margin from his TMs up-front. The TM is required to collect adequate initial margins up-front from his clients.

NSCCL intimates all members of the margin liability of each of their client. Additionally members are also required to report details of margins collected from clients to NSCCL, which holds in trust client margin monies to the extent reported by the member currency futures trading in india nse having been collected form their respective clients. No separate position limit is prescribed at the level of clearing member.

However, the clearing member shall ensure that his own trading position and the positions of each trading member clearing through him is within the limits specified above.

Reporting of client margin: The Exchange shall impose stringent penalty on members who do not collect margins from their clients. The Exchange shall also conduct regular inspections to ensure margin collection from clients. Client Broker Relationship in Derivatives Segment A client of a trading member is required to enter into an agreement with the trading member before commencing trading. A trading member must ensure compliance particularly with relation to the following while dealing currency futures trading in india nse clients: Execution of Client Broker agreement 3.

Bring risk factors to the knowledge of client by getting acknowledgement of client on risk disclosure document 4. Timely execution of orders as per the instruction of clients in respective client currency futures trading in india nse. Collection of adequate margins from the client. Maintaining separate client bank account for the segregation of client money. Timely issue of contract notes as per the prescribed format to the client. Ensuring timely pay-in and pay-out of funds to and from the clients 9.

Resolving complaint of clients if any at the earliest. Avoiding receipt and payment of cash and deal currency futures trading in india nse through account payee Cheques. Sending the periodical statement of accounts to clients. Not charging excess currency futures trading in india nse Maintaining unique client code as per the regulations The system allows the trading members to enter orders with various conditions attached to them as currency futures trading in india nse their requirements.

These conditions are broadly divided into the following categories: Time conditions Price conditions Other conditions Charges The maximum brokerage chargeable by a trading member in relation to trades effected in the contracts admitted to dealing on the Currency Derivatives segment of NSE is fixed at 2.

Settlement of currency futures contracts Currency futures contracts have two types of settlements, the MTM settlement which happens on a continuous basis at the end of each day, and the final settlement which happens on the last trading day of the futures contract. The buy price and the sell price for contracts executed during the day and squared up. Settlement prices for futures Daily settlement price on a trading day is the closing price of the respective futures contracts on such day.

The salient features of risk containment mechanism on the Currency Derivatives segment are: Types of margins Initial margin: Position limits Client Level: Issued in the interest of Investors. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment.

Last working day of the month subject to holiday calendars. The reference rate fixed by RBI two working days prior to the final settlement date will be used for final settlement.

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