Currency Futures are standardized instruments traded on exchanges that enable users to hedge price risk and/or take positions. In recent years Currency Futures has emerged as an effective tool for companies to hedge their currency risk. Hedging through banks by way of forward contracts and options where an underline exposure is a required, hedging the economic risk becomes difficult. However, there is no such restriction while hedging through an exchange. It is also beneficial for SME’s and Corporate who have issues obtaining limits from their banks. The biggest advantage of currency future is that the margins and rates are transparent. Another major advantage is the existence of a liquid market, especially up to 3 months.
Currency options are currently available on US Dollars. USD/INR Options on exchange are good means of hedging or taking a trading call.
We provide trading platform to our clients, assist them in executing trades and using currency derivative instruments on exchange as a tool to hedge the exchange risk.
“Hedging exposures on the exchange offers several benefits.”
➪ Fraktal facilitates hedging in the exchange-traded markets by helping clients set up an account for the same and assisting them in executing the trades.
➪ Transparency in pricing – What you see is what you get.
Clients can freely hedge through options. Hedging on the exchange is cheaper than OTC. Brokerage and other related costs are lower than margin charged in the OTC market.
It allows clients to lift the hedge and re-enter strategically. This gives a lot of flexibility. There is minimum delay between decision to hedge and execution.
The documentation for trading on the exchange is much simpler than the operational formalities typically involved in setting up forward and option limits with the banks.
Clients can capture market moves until the end of the trading day. Banks do not quote to corporates after 4:30PM. Sometimes decisive moves happen in the last half an hour of the trading session and having the option of hedging on the exchange allows one to capitalize on such moves.