Options trading in currency derivatives soon

Stock Exchagnes in the country will be launching Options in Currency Derivatives very soon, Securities and Exchange Board of India Chairman, C B Bhave said on Tuesday.

The Reserve Bank of India and Sebi have given in principle clearance to launch options in Currency Derivatives, Bhave said.

'Exchanges have applied to us and we are expecting to take a decision on actually allowing exchanges to launch options in currency derivatives very soon', Bhave said addressing a seminar on 'Investor Protection and Market Development' here.

Introduction of currency derivatives in stock exchanges was a subject pending for long. 'We were able to evolve a joint regulatory mechanism. We will go step by step. Initially futures was introduced, then rupee-dollar, rupee-pound and rupee-euro was introduced', he said.

On the Mutual Fund Industry, he said it was undergoing 'tremendous transformation'. The entry load ban was introduced from Aug one 2009 to July 21, 2010.

"Everyone talks of the Rs 10,000 crore (Rs 100 billion) erosion between during the entry load ban," he said. The Sebi chairman said Rs 63,000 crore (Rs 630 billion) was collected by the mutual fund industry during this period.

The truth is some of the distributors have adjusted to the new environemnt. The mutual fund industry on its own cannot collect Rs 63,000 crore in equity in existing schemes.

The asset management company needs to adjust to this and make efforts. The profits of the Asset Management Companies put together had gone up by three times during 2009-10 compared to 2008-09.

The profits of the AMC which was Rs 243 crore (Rs 2.43 billion) in 2008-09, touched Rs 870 crore (Rs 8.7 billion) in 2009-10.

This was an opportunity for the AMCs to adjust to the new environment, he said. Some AMCs are training their personnel to adjust to the new environment, some are not, he said adding unfortunately some wasted lot of time trying to scuttle this move.

The investors have Rs 1200 crore (Rs 12 billion) extra in the hands in one year when the industry is saying their collections are down.

In earlier years, money used to be collected in newly launched schemes, now money is being collected in existing schemes, he said adding existing schemes are gathering weight compared to new schemes.

So new schemes launches have come down. In retail applciations, 18-20 per cent persons apply through ASBA. this percentage wuill increase and there is need for investor education in this area.

We are talking to merchant bankers on the glitches in the system. We need to improve.

"We want to collect sufficient data on ASBAR to see how much money investors have saved by way of intetest'. In the IPO scam, Sebi could recover Rs 28 crore (Rs 280 million) from intermediatries and entities those who had unlawfully made and it was restored to the investors. Sebi is conscious that lot more can be done and would continue to keep its 'eyes and ears open."