Chairman of the Indian securities board SEBI, C.B. Bhave, today said the market watchdog is planning to introduce more currency derivatives products, beginning with options, to give a wider choice to investors.
“We will look into other kinds of derivatives (in currency trading), options to begin with, in order to offer increased products that are available,” Mr. Bhave said at a CII conference on Indian financial markets.
Currency option is a derivative instrument which gives the owner the right, but not the obligation, to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.
Mr. Bhave said the Securities and Exchange Board of India (SEBI) had launched currency derivatives in India in August, 2008, a month before the global financial crisis hit the world.
“Today, currency volumes on any given day are in the range of 6-7 billion dollars and this is when only one pair was allowed three months back and just in futures,” Mr. Bhave said.
The currency futures were limited to rupee-dollars only, but later it was extended to other pairs.
Referring to the recently filed prospectus for Indian Depository Receipts (IDR) by Standard Chartered Bank, Mr. Bhave said the regulator wants to encourage foreign companies to come and list on Indian stock exchanges in the form of IDRs.
“We will look at this experiment eagerly, because it will tell us how efficient our markets are,” he said.
Mr. Bhave said that equal treatment for different classes of investors and efficiency in markets are very high on his agenda.
He said that from next month, the time taken to list shares from the date of closing of public offers would be reduced to 12 days from the current 22 days, before being reduced further to just seven days within this fiscal. “We want to do this in two stages,” he added.
He said SEBI has also asked institutional investors to pay 100 per cent application money at the time of applying for public offers, as is required for retail investors, to ensure equal norms for different classes of investors.
Referring to the money paid to the first set of investors affected by the IPO scams of 2003-05 from the funds collected from wrongdoers, the SEBI chairman said it would take a while to make this practice a routine.