Dubai launches Mini-Indian Rupee futures

In a bid to further expand the reach of its Indian Rupee product offering, the Dubai Gold and Commodities Exchange (DGCX) has launched a Mini Indian Rupee Futures Contract (DINRM), the Dubai-based exchange said in a media statement today.

The first-of-its-kind to be introduced in the region and outside of India, the mini contract is one-tenth the size of the existing DGCX Indian Rupee futures contract.

The new contract is priced at Rs200,000 per lot compared to Rs2 million per lot for the existing regular DGCX Indian Rupee contract.

“The Mini Indian Rupee futures contract has been designed to meet increasing demand from market participants for a smaller product that allows them to execute trading strategies without making high capital investments,” said Gary Anderson, CEO of DGCX.

The smaller size of the contract will support retail remitters, individual investors and small and medium-sized businesses (SMEs) in cost-effectively managing currency risk exposure to the Indian Rupee, the DGCX statement noted.

Apart from its size, the mini contract is similar to the regular contract in all aspects including its daily settlement price, which will be based on the official US Dollar reference rate issued by the Reserve Bank of India.

“Developed after close consultations with our members and market participants, we believe the contract will particularly benefit SMEs, retail players and traders who import into and export from India, as well as others who remit funds to India regularly,” Anderson said.

“Investors can also avail an exceptional arbitrage opportunity by trading the regular Indian Rupee contract and the mini contract in tandem. The new contract is aligned with DGCX’s strategic plan to develop a strong offshore platform for the trading of a range of Emerging Market (EM) contracts,” he added.

The Mini Indian Rupee contract builds on the success of DGCX’s existing Indian Rupee Futures, which has attracted a wide range of participation from institutional players, traders and arbitrageurs. The contract, which has shown remarkable growth in the last four years, traded an average of more than two billion dollars a day in the first quarter of 2013.

The Mini Indian Rupee Futures can be cross-margined with the regular DGCX Indian Rupee product offering. This means that any excess margin in an account for one of the Indian Rupee products can be used to cover an account in the other Indian Rupee product that has fallen below the margin requirement. The smaller size of the contract enables participants to construct precisely tailored hedges on the Indian Rupee for any underlying commodity.

Prices for the DGCX Mini Indian Rupee Futures contract will be quoted in US Cents per 100 Indian Rupees, with a minimum premium fluctuation of 0.000001 US Dollars per Rupee ($2 per contract). The Mini Indian Rupee Futures contract can be traded Monday through Friday from 7.00 AM to 11.30 PM UAE time.

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