(MENAFN - Khaleej Times) The Dubai Gold and Commodities Exchange, or DGCX, said on Monday that it would launch an Indian Rupee, INR Options Contract in September in a bid to offer "more flexibility to hedge risk and trade" in the Indian currency.
DGCX, the region's first derivatives exchange, will also become the first to implement INR Options Contract legally outside India.
Eric Hasham, chief executive of DGCX, said the provision of an Indian Rupee Options contract, to be launched on September 26, would enable it to build on the exceptional volume growth achieved by its Indian rupee futures contract over the last 12 months and meet member demand to further strengthen our INR offering.
"DGCX has been working closely with its members and market participants to develop this additional risk management tool. The new options contract is the result of this interaction and feedback process," he said.
Hasham said Indian rupee options contracts would provide DGCX members with more flexibility to hedge risk and trade in the Indian rupee in a transparent, regulated and cleared trading environment.
Sajtih Kumar P.K, Director and CEO, JRG International Brokerage, said INR Options would boost trading on DGCX and it would "bring the safest trading system in Indian rupee for global investors. Indian expats will get double benefits including tax exemption and secured trading system, by using DGCX INR futures and options."
"They can minimize their business and investment risks into smaller level by using DGCX INR futures and options," Kumar told Khaleej Times.
Each INR Options contract represents two million rupees. Prices will be quoted in US cents per 100 Indian rupees, with a minimum premium fluctuation of 0.000001 US Dollars per rupee (2 per contract). At launch, the October 2011 expiry month will be available to trade.
Kumar said INR Options would become a tool to regional Investors to study more about the combination of options and futures trading system, Kumar pointed out. "It will also benefit multi-national investors to focus more on India for their investments through these riskless trading system," he said.
Explaining the advantages of the options contract, Kumar said it is a good tool for hedgers and speculators who desire to manage risk "since it imposes limited risk. For the hedgers, the options perform the function of setting either a maximum buying price or minimum selling price for a future transaction without locking in this price. If the market price is better at the time the transaction takes place, the hedger can take full advantage of the option. For the speculators, option allows them to trade the maximum amount of money they can lose." DGCX will hold workshops on the INR Options contract prior to its launch on September 26.
"As more awareness is required about options contract trading techniques, JRG also has scheduled special training sessions for investors on all Fridays free of cost through IBMC Investors Clubs l in Dubai, Abu Dhabi and Sharjah," said Kumar.