New Indian Oil Futures' Contract Off to Steady Start

One of India's most liquid financial derivatives Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term, the National Commodity & Derivative Exchange (NCDEX), has reported positive metrics in its recently launched Brent Crude Oil futures contract. The contract was launched as NCDEX gradually enhances its product portfolio to cater to the needs of Indian corporates and hedgers.

Trading volumes started strong on day one of the launch of the contract, the 20th of June, according to data from the exchange, there was INR 215,00,000 (US $350,000) worth of transactions traded.

The new energy contract falls in line with the exchange's intention to provide real value hedging clients contracts that are free from currency risk. The firm launched a similar precious metals contract in January.

The Brent Crude contract integrates international price discovery markets with the Indian futures market and eliminates any currency distortion to provide a very simple and perfect hedge option for domestic companies and value chain participants. Since contract prices will be in tandem with international prices, the final settlement price will be simple and transparent.

India is one of the world's largest oil importing nations, according to government figures, the BRICS nation imports over 75% of its oil, whereas rival China imports 60%. The recent crisis in Iraq has altered the price of internationally traded oil, which is having a direct impact on India's economy.

Samir Shah, pictured, MD & CEO, NCDEX, commented about the launch of the new contract in a statement, he said: "India is the world's sixth largest consumer of oil and dependent on imports for supply. This unique contract will help oil companies hedge their price risk without the distortions created by currency fluctuations. We are, therefore, expecting healthy participation from physical market players."

The 2013 rupee crisis shaved 20% off the value of the currency against the greenback. Currency risk has been one of the most crucial concerns for the Indian corporate sector.

The new contract aims to eliminate currency movements to offer users a simple hedging instrument. The price of the contract is based on the FOB Cushing, Oklahoma, United States of America, which is exclusive for all levies and taxes .

Salam Khan, a Hyderabad-based broker explained to Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates: “The NCDEX is promoting itself as the preferred exchange for needs based traders looking for limited risk hedging contracts.”