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India: New Derivatives Exchange Established

(Oct. 1, 2010) The United Stock Exchange of India, launched on September 21, 2010, is a new exchange for currency derivatives, or “contracts between sellers and buyers, whose values are derived from the underlying assets, the currency amounts.” Such contracts are “risk management tools in foreign exchange and money markets,” and the new exchange is reportedly “a result of a promise by the Indian government to give market participants more tools to hedge foreign exchange risks.” (Amrit Dhillon, Futures Trading: India to Launch New Currency Derivatives Exchange in Mumbai, 169 DAILY REPORT FOR EXECUTIVES EE-6 (Sept. 2, 2010),

According to Indian officials, the new exchange is also “a new chapter in Indian financial markets”; formerly, futures trading was allowed only in the currency pairs of dollar, yen, pound, and euro. (Id.) The exchange opened with 200 members; another 200 applications are pending with the Securities and Exchange Board of India, the market regulator, for approval. The USE will operate in four currency pairs: dollar-rupee, euro-rupee, yen-rupee, and pound sterling-rupee. The USE has established a knowledge center to help provide education on the benefits of derivatives and trading to Indian businesses and traders, among whom currency trading is still not well understood. If its operations go smoothly, the new exchange may also set up trading in currency options in the future. (Id.) Among other information, the website of the USE has links to its by-laws, rules, and regulations (under “Downloads”) as well as to circulars. (United Stock Exchange website, (last visited Sept. 29, 2010).)