MCX looks for elbow room to expand

As volumes in currency futures have grown at Rs 2,400 crore a day over the past three months, market leader multi commodity exchange (MCX) expects the regulator to liberalise further in terms of increasing products, extending trading hours and an increase in lot size to help broaden the market.

"Regulators have been poised towards progressive liberalisation and as and when they deem fit, euro and yen should be permitted," said U Venkataraman, chief executive officer, MCX-SX. "Trading hours could also get extended from 5 pm so as to benefit the real participants from American market movement."

Several banks run their night desk up to 11 pm and can take advantage from this. Over the past three months the market has gained in efficiency and the arbitrage opportunity that stood at around 50 paisa in October has come down to 35 paisa.

MCX expects daily volumes to touch first milestone of $1billion soon. While banks, exporters and importers having real forex exposures have been major contributors to the volumes, it expects the SME and commodity segment to come in full stream.

Counting big on exporter's MCX has entered into an exclusive tie up with Federation of Indian Exports Organisation (FIEO) which has 11,000 exporters registered with them. "We are conducting joint seminars where we explain them benefits," he said.

Retail participation is also driving in, he says. "To get in is fairly easy, one can go to a broker in the market and after fulfilling know your customer norm they can get along."

If dollar is trading at Rs 47 and one has to travel abroad three months hence, he can lock himself at this rate. Three months hence even if rupee depreciates to a level of 52 against a dollar he would get the benefit of lower rate.