ICE Futures U.S. announced that it will launch a new cash-settled currency futures contract based on the Indian rupee/U.S. dollar exchange rate on Tuesday, January 22. The ICE rupee contract will be the first futures contract on the Indian currency offered by a U.S. exchange. It offers market participants the ease of doing business in a regulated futures environment for execution and clearing, alongside ICE’s suite of more than 60 currency contracts, which includes the U.S. Dollar Index.
The listing of the Indian rupee contract recognizes the increasing importance and integration of India into the world economy and responds to mounting interest in exchange-traded products from institutional and professional traders and money managers, including CTAs and hedge funds.
The Indian rupee has grown rapidly to become the sixteenth most traded currency in the world. With approximately $70 billion in turnover a day, this is roughly where the Korean won—then the largest emerging market currency—was in turnover in 2010. The rupee ranks among the most actively traded of the emerging market currencies, in the same class with the Korean won, Russian ruble, Chinese renminbi and Mexican peso. From the BIS 2010 survey, in the emerging market currency category, the rupee ranked fourth in spot, third in forwards and ninth in swaps. The offshore market today is as big as the onshore market, as is the case with other emerging market currencies*.
The ICE rupee contract covers 2,000,000 Indian rupees, around $40,000**. The tick size is $.000001 per rupee, or $2.00 a contract. The Exchange symbol for the contract is KIU. Contract listings are monthly for each of the twelve calendar months for twelve consecutive calendar months, for a maturity range out one year. At launch, listed contract months will be from the February 2013 expiry to the January 2014 expiry; a new contract month is listed for trading on the business day following the last trading day of the expiring contract month.
The contract is available for EFP and block trading, with no surcharges for these transactions beyond the normal emerging market exchange and clearing fee of $0.30/side.
The contract is available on the ICE electronic trading platform that offers state of the art technology with micro-second transaction times. It is open for trading Monday through Friday from 8pm ET to 5pm ET. Trading closes for the weekend at 5pm ET on Friday and opens again at 6pm ET on Sunday. The trading platform is open for order entry a half hour before the start of trading.
ICE also will launch a cash-settled Brazilian real contract on January 28.
For more information about the two new currency contracts, please contact Scott
Brusso, Director, ICE Currency Products, 312-836-6741/scott.brusso@theice.com or Ray McKenzie, VP, ICE Futures U.S., 212-748-4053/ray.mckenzie@theice.com.
* = Statistics in this paragraph are taken from the blog posting Trading in the rupee: Starting to look like serious numbers, Vimal Balasubramaniam and Ajay Shah, 16 June 2012, http://ajayshahblog.blogspot.com/2012/06/trading-in-rupee-starting-to-look-like.html.
** = Using an exchange rate from Jan 2, 2013, the value of the contract is approximately US$36,800.
