BSE Brings Back the Freebie in Onshore Rupee Derivatives

India's oldest exchange, the Bombay Stock Exchange (BSE) has succumbed to the world of FX derivatives. The Mumbai-based exchange has launched commission free FX futures on its new Trading Platform as it attempts to diversify its holdings in declining equity margins.

The exchange has gone live with BOLT PLUS, a new low latency terminal supplied by Deutsch Boerse’s New Trading Architecture. The new portal will also enable the exchange to deal with a large number of orders, with an order handling capacity of 500,000 order messages per second.

For the new asset class, the BSE uses the old age technique of 'special promotions' as it competes with rivals, National Stock Exchange (NSE) and MCX, to lure currency traders to its den. The exchange issued a circular which informed traders of its offering of zero commissions on transactions.

The BSE becomes the fourth Indian exchange to launch onshore FX futures in the rupee. The move comes during a hostile period for the BRICS nation’s currency which crossed record lows. The offshore rupee market is plagued by speculators bullying the NDF rupee price, an initiative that New Delhi disregards.

Dr Syed Ahsan, Dean of Dhofar University (a writer and analyst on Indian financial markets) spoke about the rupee in a comment to Forex Magnates, he said: "Expect more doom and gloom as the election approaches, we foresee further weakening of 8 to 10% in the next quarter."

Rupee futures were first launched in India in 2008 on the back of growing concerns by corporates to manage their exposure. The NSE and MCX both launched a commission- free offering, however they both introduced commissions in 2011 after the Competition Commission of India got involved.

Mohd Naveed, a Delhi-based proprietary trader commented to Forex Magnates: “With the recent Commodity Transaction Tax killing the commodity space, investors are branching out to alternative instruments including FX."

BSE offers FX through its platform and reported reasonable volume of $52 million on its first day of trading.