Derivatives market operator the Chicago Mercantile Exchange (CME) has extended its emerging market currency offering with new Indian rupee-based FX futures contracts.
The new contracts will offer greater precision for currency hedging for the Indian rupee compared to existing over-the-counter (OTC) dollar-rupee non-deliverable forward contracts. The CME has a target launch date of 28 January and the instruments will be subject to CME rules, pending regulatory approval.
Standard-sized contracts will have a five million rupee notional amount, alongside an e-mini contract with a notional amount of one million rupees. Both contracts will trade on the CME Globex platform and will be cash settled at expiry to reciprocal of the spot Indian rupee per US dollar as determined by the Reserve Bank of India.
Derek Sammann, senior managing director, interest rates and FX products, CME Group said the new offering expanded his firm’s commitment to currencies of the BRIC nations.
“With the rapid rise in growth economies like India, there has been an increase in demand for flexible, capital-efficient tools that market participants access to participate in and act on emerging opportunities,” Sammann said. “Working closely with our customers, CME has developed these rupee contracts to address their needs, and enable participants in the rapid growth of one of the world’s leading emerging markets.”
CME offers 56 futures and 31 options contacts reflecting an average daily notional value of US$110 billion in 2012 and provides OTC clearing for 12 non-deliverable forward currency pairs.