Depository Participant Services

Currency Derivatives

Karvy Currency Derivatives Segment, a specialized group vertical within Karvy Stock Broking Limited, has been established in 2008 to cater to the growing needs of corporate houses to manage currency exchange rate risk. With the changing dynamics and increasing volatility of exchange rates across the globe, companies exposed to currency risk face the challenge of maintaining continued profit margins. Currency Derivatives would be one of the best options to manage any related exchange rate risk and be free from the worries of market uncertainties.

At Karvy Currency Derivatives Segment (CDS), we provide customized hedging strategies for importers, exporters and companies with foreign exchange exposure. We offer forex advisory and brokerage service for the Indian currency derivative market, and provide a robust and reliable online trading platform. Currency Derivatives Segment – Karvy Stock Broking Limited is an active member of the National Stock Exchange (NSE), Metropolitan Stock Exchange of India (MSEI) and Bombay Stock Exchange (BSE).

What are Currency Derivatives?

These are options and futures contracts through which you can buy or sell specified quantities of pairs of currencies at a future date (which is predetermined). The price or exchange rate is decided on the date of purchase. The derivatives are similar to options and futures in the stock market, aside from the fact that currency pairs are the underlying assets.

Currencies are often traded in by banks and financial trading institutions. Individual investors can also trade in currency derivatives to take advantage of variations in currency exchange rates. The market for currency trading is one of the biggest and fastest growing in the world.

How Do Currency Derivatives Work?

Trading in these derivatives gives you an option to trade in four foreign currencies which are pegged against the Indian rupee. You can trade through futures trading contracts for different foreign currencies through leading stock exchanges in India. However, foreign institutional investors and non-resident Indians cannot trade in this market.

Investors can hedge against foreign exchange risk and benefit from the rupee’s movement against major foreign currencies. There has been an increase in volumes of trading in currency futures over the years. The euro, Japanese yen, British pound and US dollar are the major currencies for which you can get currency derivatives paired with the rupee.

Traders have to pay only a certain percentage value of the contracts to trade, and not the full contract value, which makes these contracts lucrative. Brokers get guidelines from exchanges to help decide the margins. Usually, they have to pay about 3%-5% of the value of the contracts for buying currency derivatives… View More