• On Thursday, Sebi approved the launch of five new derivative products to provide investors a wide range of risk mitigation products and create more activity in the onshore market.

• On Friday, a Reserve Bank of India (RBI) panel recommended the introduction of trading in currency futures to enable market participants to better manage currency risk exposures.

Percy Mistry, who chaired the High Powered Committee on making Mumbai an International Finance Centre (IFC), spoke about the “missing markets” that will make India a global financial powerhouse. It might be a case of “better late than never”, but financial regulators in India are taking sure and steady steps to create those missing markets.

The new derivative products — mini-contracts on equity indices, options with longer life/ tenure, volatility index and F&O contracts, options on futures, bond indices and F&O contracts, exchange-traded currency (foreign exchange) futures & options and introduction of exchange-traded products to cater to different investment strategies — approved by Sebi — will provide investors with a larger range of risk mitigation products and create more activity in the Indian onshore markets.

“These products are expected to bring transactions based on private-synthetic products to an exchange-traded transparent mechanism with appropriate regulatory supervision,” Sebi said. The RBI has proposed dedicated exchanges for currency futures and mooted the entry of resident Indians first to be followed by non-resident Indians and foreign investors.

The issue of currency futures is more relevant now. When the rupee appreciates against the dollar, the exposure would result in gain or loss for residents purchasing or selling the dollar. As unpredicted movements in exchange rates expose investors to currency risks, currency futures enable them to hedge these risks.

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