DGCX Extends FX Product Range - Launches Two New Mini Indian Rupee Futures Contracts

Dubai’s premier multi-asset commodities and FX futures trading venue, the Dubai Gold and Commodities Exchange (DGCX),has expanded its product range for international currency traders. The firm reported that its signature offshore rupee derivatives range will now include mini futures non-dollar crosses. The new instruments will extend the exchange’s offerings to three crosses.

The region’s largest currency futures exchange has enhanced its product range to include new mini contracts. The firm will launch two new pairs of Mini Indian Rupee futures contracts denominated in British Pound (INR GBP) and Euro (INR EUR) respectively. The new contracts, which went live earlier this week, will be cleared by the Dubai Commodities Clearing Corporation (DCCC).

Gaurang Desai, pictured, Interim CEO of DGCX, commented about the launch in a statement: “Launching two cross-currency contracts demonstrates DGCX’s forward thinking strategy and robust product innovation. While the MSCI Futures contracts launched last week were designed for an institutional investor base, these two products of Mini Indian Rupee Futures primarily have a retail focus.

We are keen to ensure that our product portfolio has the diversity necessary to service both sides of the customer spectrum. The new mini sized contracts will further strengthen our Indian product offering while offering immense value to retail participants who are seeking to hedge against global currency Volatility .”

The mini contracts will be added to the exchange’s current offering for low-margin traders, the venue launched mini futures in its core INR USD contract in April last year, traders welcomed the smaller size contract with trading volumes increasing significantly, in July 2014, the mini futures contract volume increased 3% from figures reported by the exchange in June.

The latest offering is the first of its kind, the DGCX was a pioneer in the offshore issuance of rupee futures in 2007, the launch of the contracts came as a surprise to industry participants as the domestic FX market in India is restricted by the convertibility of the rupee. The DGCX has played its cards right, with Dubai being host to a substantial Indian diaspora, the exchange is one of the most liquid offering Indian instruments compared to rivals, the CME and SGXC. DGCX is a significant reference market for exchange-traded Indian Rupee contracts with a market share of more than 35%.

Non-dollar IRN Crosses

The venue reported that the DGCX INRGBP Mini Futures contract is quoted in British Pounds while DGCX INREUR Mini Futures contract is denominated in Euros. Both the contracts are cash settled in US Dollars. The new contracts are priced at 400,000 Rupees per lot compared to 2 million rupees per lot for the existing regular DGCX Indian Rupee contract. The smaller size of these contracts will encourage retail participants, individual investors and small and medium-sized businesses (SMEs) to cost-effectively manage their price risk and exposure to Euro and British Pound volatility versus the Indian Rupee. The new contracts will also offer new arbitrage opportunities.

Prices for INRGBP Mini Futures and INREUR Mini Futures are quoted in GBP Pence per 100 Indian Rupees and EUR Cents per 100 Indian Rupees respectively. Both the contracts can be traded Monday through Friday from 7.00 AM to 11.30 PM UAE time.

Emerging market currencies are gaining traction across the board as brokers look beyond the core instruments for trading activity. Saumya Basu, CEO of MC Broking in Kolkata, India, commented about the growth in international rupee FX trading in a comment to Forex Magnates, he said: “Traditionally, the rupee has been a hard product to tackle however, last years miserable move gave traders an appetite to trade in the currency.”

The rupee was one of the worst performing currencies last year against the greenback, inflation and the Fed’s bond buying programme impacted a number of emerging market economies.