85% of the volume is not for hedging purposes, it's majorly driven by arbitragers, pro traders, and speculators in the market says Nuvama's Abhilash Koikkara while talking about #RBI's circular on currency derivatives.
Watch the whole conversation heere:https://bit.ly/3VKm0CH
Watch the whole conversation heere:https://bit.ly/3VKm0CH
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TVTranscript
00:00 Roughly around, if I'm not wrong, around 5 to 6% of the market volume is from corporates.
00:06 These are proper hedgers who have underlying import-export exposures.
00:10 Around 7% to 8% is FBIs who are on institutions and FBIs who are hedging their kind of exposures.
00:17 And rest is a mix of arbitragers, it is a mix of speculators and it's a mix of prop
00:22 desk.
00:23 So if I had to put a number, around 85% of the volume are not volume for hedging purpose.
00:30 And as per the RBI circular, which is kind of clearly saying that they want to ensure
00:34 that exchange-traded currency derivatives are used only for hedging purpose.
00:38 And it was brought in with that intention of that SMEs and MSMEs could hedge on the
00:42 exchange.
00:44 But if I look at the current scenario, after almost 15 years now, since the contract has
00:48 been launched, around 85% of the volume is non-FBI and non-hedging volume and it is majorly
00:54 driven by arbitragers, prop traders and speculators in the market.
00:58 [Music]