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What is currency trading? While trade is international, currencies are national. As international transactions are settled in global currencies, usually they are bought / sold for one another and this constitutes 'currency trading'.   Why Exchange Traded Currency Derivatives? Broader participation Efficient risk management systems Provide transparent trading platform Efficiency in price discovery Eliminate counterparty credit risk Provide access to all types of market participants Offer standardized products & settlement cycles Small order up to 1 contract or 1000 USD can be executed Underlying exposure is not mandatory   What are the advantages of trading with Bonanza? Bonanza portfolio Ltd. brings to you state–of-the-art trading services. It offers you safe, transparent and easy ways to trade. It offers a bevy of incomparable advantages which make the experience of trading online swift, efficient and pleasant. Bonanza offers you an added advantage to enjoy the reach of our distribution network comprising of more than 1632 locations spread over 521 cities catering to over 2,00,000 clients. Presently, Bonanza offers trading in the currency segment on all the three Exchanges namely, National Stock Exchange (NSE), MCX Stock Exchange Ltd. (MCX-SX) and Bombay Stock Exchange (BSE). Every investor is unique and no two participants follow the same investment pattern. Bonanza provides thorough and unbiased research to help participants take informed decisions. With daily, weekly and monthly newsletters and intraday recommendations on SMS, you will truly benefit from our research expertise.   What are Exchange Traded Currency Futures? Currency Futures traded on Exchange: Are standard contracts of a specified quantity To exchange one currency for another At a specified date in the future called settlement date At a price that is fixed on the purchase date called futures price   What is currency futures contract? A currency futures contract is standardized version of forward contract that is traded on a regulated exchange. It is an agreement to buy or sell a specified quantity of an underlying currency on a specified date in the future at specified rate. (USD1 = INR 48.00). (Note: USD is abbreviation for the US Dollar and INR for the Indian Rupee)   What is OTC Market? OTC is the abbreviation of ‘Over the Counter’. It has no central marketplace and is linked to a network of dealers / traders who do not physically meet but instead communicate through a network of phone calls & via computers. OTC contracts are typically customized based on negotiations between counter parties. The counter party default risk depends on the counter party credit-worthiness and other factors.   Who can participate in currency futures market? Any resident Indian or company including banks and financial institutions can participate in the futures market. However, at present, Foreign Institutional Investors (FIIs) and Non Resident Indians (NRIs) are not permitted to participate in the currency futures market. Participants in the Currency Derivative Segment can be classified in to three broad categories: (A) Hedgers Given the recent geopolitical uncertainties, the foreign currency markets have been in turmoil. What little returns that can be achieved need protection by locking in your exchange rate for your exposure through currency futures. The Businessmen and investing public are increasingly exposed to global markets and the issue of protecting against foreign exchange risk becomes critical. Business Houses, Entrepreneurs and individuals who can benefit from hedging through Currency Futures: Exporters, Importers & Money Changers Individuals / HNI’s investors Borrower, FCY Loans, Corporate Commodity, Jewelers, Diamond & Bullion Traders Petroleum Product Traders Banks & Financial Institutions Professionals receiving remuneration in foreign currency Investors investing in assets exposed to currency risk (B) View Based Traders Currency futures provide investors / traders an efficient platform to observe the movement of local currency (INR) against other currency (USD) and trade. (C) Arbitragers Currency Futures provides opportunity for Arbitrage Trading by taking advantage of price difference of the same or similar product between two or more markets by striking a combination of matching deals and capitalize upon the imbalance without any additional market risk.   Can currency futures help small traders? Yes. Minimum size of USD / INR futures contract is USD 1000. This is well within the reach of small traders. All transactions on the exchange are anonymous and are executed on a price-time priority ensuing that the best price is available to all the categories of market participants irrespective of their size. Also since the profits / losses in futures market are collected / paid on a daily basis, the scope of losses for participants gets limited.   I do not have any exposure to foreign exchange risks. Does a currency futures exchange mean anything to me? Yes, it does if you want to invest purely as an investor. You can benefit from the exchange rate fluctuations just as you can benefit by investing in equities in the stock market. However, as in stock markets, you can also stand to lose money if price movements are not keeping with what you had anticipated. Participating in currency futures exchange is risky, just as the stock market is. You should therefore be knowledgeable about the currency market if you want to participate as an investor.   How do exchange traded currency futures enable hedging against currency risk? On a currency exchange platform you can buy or sell currency futures. If you are an importer you can buy futures to 'lock in' a price for your purchase of actual foreign currency at a future date. You thus avoid exchange rate risk that you would otherwise have faced. On other hand if you are an exporter, you sell currency futures on the exchange platform and 'lock in' a sale price at a future date.   What are the risks involved in the currency futures market? Risk in currency futures pertain to movements in the currency exchange rate. There is no rule to determine whether the currency rate will rise or fall or remain unchanged. A judgment on this is the domain of experts with deep knowledge and understanding of the variables that affect currency rates.   What are the factors that affect the exchange rate of currency? A country’s exchange rate is typically affected by the supply and demand for the country’s currency in the international foreign exchange market. The demand and supply dynamics is principally influenced by the factors like interest rates, inflation, trade balance and political and economic scenarios in the country. The level of confidence in the economy of a particular country also influences the currency of that country.   What are the contract specifications for currency futures? Presently only USD / INR are available for trading.   How do I start trading at Bonanza? Firstly, you should be having a PAN Number (This is allotted by Income Tax Department, Government of India). It has been made mandatory by SEBI (Security & Exchange Board of India), for all person/s who transacted on any stock exchange to have a PAN Number. Secondly, you have to register as a client with Bonanza. We have a separate Registration form for the Currency Segment which is required to be filled up. Read the instructions on the Registration form carefully, fill up all the required fields and make sure you attach the required supporting documents. Failure to do so may lead to your application being rejected. The process of Registration and activation of your account will be completed in around 7 days from the day we receive the registration form duly completed in all respect along with all your documents. After an initial deposit has been paid in by you, we will update our database and activate your ID. You shall receive a Welcome communication sent by us through courier.   I am an existing client of Bonanza, can I immediately start trading in Currency at Bonanza? Yes, you will have to complete the registration for the currency derivatives segment. We have a separate Registration form for the Currency Segment which is required to be filled up. The process of Registration and activation of your account will be completed in around 7 days from the day we receive the registration form duly completed in all respect along with all your documents.