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Overview

 

Bonanza Portfolio Ltd. has always been the forerunner in initiating any new financial product and have launched trading facilities on the Currency Derivatives Segment for our clients at all three Exchanges namely NSE, BSE & MCX-SX. Thus, we bring to you a new trading segment which brings you Foreign Currency & Interest Rate Futures Trading. These asset classes, where the participation was earlier limited to Banks, Currency brokers, Licensed Money Changers, Corporates and Multinational Companies, are now available at your convenience at your finger tips.

Exchange Traded Currency Derivatives

In order to upgrade Indian Foreign Markets in line with International standards, a well developed foreign exchange derivative market place having strict governance and transparency was inevitable.

With a view to enable entities to manage risk due to volatility in the currency market, the Internal Working Group of RBI explored the advantages of introducing currency futures and submitted the Report of the Internal Working Group in April 2008, which recommended the introduction of Exchange Traded Currency Futures. Bonanza offers you these services so that you can trade in the latest market offerings at your comfort and convenience.

Presently USD / INR futures are available for trading on NSE / MCX-SX / BSE.

Exchange Traded Interest Rate Derivatives

Interest Rate Futures are contractual agreements to buy or sell underlying interest bearing instruments on a specific future date at a pre-determined price. Exchange Traded Interest Rate Futures (ETIRF) are standardized interest rate contracts traded on the exchange.

The trading in Interest Rate Futures was launched on the National Stock Exchange of India (NSE) on 31st August 2009 and will be launched shortly on MCX Stock Exchange (MCX-SX) and Bombay Stock Exchange (BSE).

 

Salient Features

 

Salient Features of Currency Derivatives

  • Small orders can be executed up to 1 contract or 1000 USD without any additional cost.
  • Complete Transparency of Quotes, Market Price and Price Discovery.
  • Foreign Currency exposure not required to trade in the currency futures.
  • Synchronization with International Market.
  • Less Fluctuation.
  • Low Margins.
  • Largest Market.

Interest Rate Futures benefit the investors in the following ways:

  • Unlike Currency Derivatives FIIs and NRIs are permitted to trade in ETIRF.
  • Provides flexibility of multiple securities deliveries for one contract.
  • Provides flexibility of timing for securities deliveries.
  • Provides flexibility between square-up and delivery settlement of position.
  • Can be traded from the existing Currency Derivative Facility.

Benefits with Bonanza

  • Daily Research Report – "Daily Forex Insight". (Three Reports in a day)
  • Membership of all the stock exchanges.
  • Pan India Presence.
  • Regular updates of the market via SMS & Intraday technical & fundamental updates.
 

FAQs

 

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..

end faq


What is an Interest Rate Futures Contract?

Interest rate futures (IRF) are contractual agreements to buy or sell underlying interest bearing instruments on a specific future date at a pre-determined price.

What are Exchange Traded Interest Rate Futures (ETRIF)?

Interest Rate Futures traded on Exchange

  • Are standard contracts of a specified quantity
  • At a specified date in the future called settlement date
  • At a price that is fixed on the purchase date called futures price
  • Settled in delivery of deliverable securities.

Who can participate in Interest Rate futures market?

Any resident Indian, Corporate, Banks Financial institutions and Foreign Institutional Investors (FIIs) can participate in the Interest Rate Futures market. However, at present, Non Resident Indians (NRIs) are not permitted to participate in Interest Rate Futures market.

Who can benefit from Interest Rate Futures?

Hedging:

  • Financial Sector:
    Banks, mutual funds, foreign institutional investors, pension funds, insurance companies, and public provident funds) bears a major portion of the interest rate risk on account of their exposure to government securities.
  • Corporate Sector:
    Interest rate futures will be highly appealing to corporate sector, having investment / borrowings and are exposed to risk interest rate risk will benefit from the product.
  • Household Sector:
    Today, with a large stock of household financial savings on the assets side and an increasing quantum of housing loans on the liabilities side, interest rate risk is becoming increasingly important for the household sector as well.
    Moreover, interest rate products are the primary instruments available to hedge inflation risk which is typically the single most important macroeconomic risk faced by the household sector.

In this context, therefore, Exchange-Traded Interest Rate Derivatives, a credible institutional hedging mechanism, provides all the sectors greater access to interest rate risk management tools.

Speculative Trading:
Interest Rate futures allow investors/traders to take a view on the movement of the local interest rates. The ETIRF provide an asset class with a very efficient, transparent and liquid system to trade on.

Arbitrage:
Arbitrage with regard to Interest Rate Futures could be a trading strategy between two markets and can trade both cash and futures shall be able to identify any price different between two market places.

Typical arbitrage can take place between.

  • Whole Sale Debt Market or Retail Debt Market and Future Market
  • Investments in interest bearing securities and Future Market.
  • Borrowings and Future Market.

What are the factors that affect the exchange rate of IRF?

The increase and decrease in demand and supply dynamics of fund requirement which principally influence IRF rate. The factors like inflation, political and economic scenarios Globally India. There are a number of forces that must be taken into account when attempting to evaluate the current and future movement of interest rates.

Economy: When the economy is growing, consumers have jobs and savings to lend through banks, but they must also borrow for large. As the demand for funds increases, interest rates rise and act as a ration for the funds available. The opposite is also true; when the demand for funds is low, interest rates fall.

Inflationary / Recessionary pressures: will also affect interest rates, because the rates paid on most loans are fixed in the loan contract.

Government Action: The actions of the government have an effect on interest rates as well, because it is the nation’s largest borrower. In the Indian context Reserve Bank of India regulates the Interest Rate. Any changes in financial, economic or banking policies initiates.

International forces: play an important role in influencing interest rates. To the extent that foreign investors are willing to lend money, they supplement domestic sources of funds in the marketplace, driving interest rates down.

Fluctuation in US Dollar: The dollar is the main currency in international trade and is used extensively in world markets. Orderly fluctuations of the dollar in foreign exchange markets are essential for domestic and international stability. Major or very volatile exchange rate movements could force the Central Bank to act, as well as affect interest rates and the county’s monetary policy.

Changes Major Economies: Changes in the condition of the Major Economies will also have a significant effect on interest rates. If any large financial institution is threatened with collapse, it would not default on the funds which are owed to its depositors.

  • 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

What is coupon?

Coupon is the interest paid by the issuer / Borrower (e.g. Government of India – GOI) to the bond holders / lender at periodic intervals.

What is the coupon for the underlying instrument of the IRF contract?

In case of present IRF notional coupon is 7% with semi-annual compounding.

What are the contract specifications for currency futures?

FeaturesDescription
Underlying 10YGS7 (10-Year Notional Coupon-bearing GoI security)
Notional Coupon 7% with semi-annual compounding.
Trading Hours 9 a.m. to 5 p.m. (Monday to Friday excluding gazette holidays) or revision thereof on account of sun outage.
Size of the contract INR 2 lacks
Quotation Quoted in rupee up to 4 decimal points
Tick Size The tick size of Rs. 0.0025 or 0.25 Paisa.
Price Circuit Limits +/-5 % of daily settlement price
Available contracts The Contract Cycle would consist of fixed quarterly contracts for entire year expiring in March – June – September and December
Tenure of Contract will have a maximum of 12 month expiration cycle
Daily Settlement Price (DSP) Last half an hour volume weighted average price (VWAP) of the future contract. In absence of last half an hour trading, the theoretical price as determined by the exchange would be the daily settlement price.
Daily Mark To Market The daily mark-to-market settlement calculated based on the DSP shall be done on T+1 day.
Mode of Final Settlement Physically settled by delivery of deliverable grade securities.
Deliverable Grade Securities (DGS) GoI securities maturing at least 8 years but not more than 12 years from the first day of the delivery month with Minimum total outstanding stock of Rs 10,000 Crore. (List given below)
Invoice Price of DGS Futures daily settlement price multiplied by the conversion factor plus accrued interest
Conversion Factor The conversion factor for deliverable grade security shall be equal to the price of the security (per rupee of the principal), on the first day (calendar day) of the delivery month, to yield 7% with semiannual compounding. Given for each DGS in the list below)
Contract Settlement Price Last half an hour volume weighted average price of the future contract (VWAP) at the normal market closing time on the expiry day
Last Trading Day/ Expiry Day for a contract The trading in the current month contract will be ceased on the expiry day which is 7 days prior to the last business day of the expiry month (assuming both the days are trading days) at the normal market closing time on the expiry day.
Final settlement day The final settlement day shall generally be the T+2 day from the expiry day of the contract.

What are Deliverable Grade Securities?

IRFs are physically settled by delivery of deliverable grade securities. The Deliverable Grade of Securities (DGS) shall be the list of securities as specified by the Clearing Corporation from time to time.

Which are Deliverable Grade Securities?

To start with the deliverable grade securities, which fulfill stipulated criteria, along with respective conversion factors of the futures contract available for trading has been specified Deliverable basket and conversion factor for December 2009 contract

I am an existing client of Bonanza can I immediately start trading in Interest Rate Future 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.

What are the contract specifications for currency futures?

Presently only USD / INR are available for trading..

How do I start trading at Bonanza?

Sr NoISINNomenclatureDate of maturityConversion Factor
1 IN0020020163 6.25% 2018 (conv) 2-Jan-18 0.9546
2 IN0020080019 8.24% 2018 22-Apr-18 1.0765
3 IN0020080019 8.24% 2018 22-Apr-18 1.0765
4 IN0019980286 12.60 % 2018 23-Nov-18 1.3616
5 IN0020030097 5.64 % 2019 2-Jan-19 0.9103
6 IN0020080068 6.05% GS 2019 (FEB) 2-Feb-19 0.9373
7 IN0020030048 6.05% 2019 (con) 12-Jun-19 0.9349
8 IN0020090042 6.90% 2019 13-Jul-19 0.9931
9 IN0020020171 6.35% 2020 (con) 2-Jan-20 0.9538
10 IN0020060318 7.94%2021 24-May-21 1.0722
11 IN0020010040 10.25% 2021 30-May-21 1.25

Deliverable basket and conversion factor for March 2010 contract

Sr NoISINNomenclatureDate of maturityConversion Factor
1 IN0020080019 8.24% 2018 (conv) 22-Apr-18 1.075
2 IN0020030063 5.69 % 2018(conv) 25-Sep-18 0.9171
3 IN0019980286 12.60 % 2018 23-Nov-18 1.3542
4 IN0020030097 5.64 % 2019 2-Jan-19 0.912
5 IN0020080068 6.05% GS 2019 (FEB) 2-Feb-19 0.9385
6 IN0020030048 6.05% 2019 (con) 12-Jun-19 0.936
7 IN0020090042 6.90% 2019 13-Jul-19 0.9931
8 IN0020020171 6.35% 2020 (con) 2-Jan-20 0.9545
9 IN0020060318 7.94%2021 24-May-21 1.0713
10 IN0020010040 10.25% 2021 30-May-21 1.2465
11 IN0020060037 8.20 % 2022 15-Feb-22 1.0949

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..

end faq

 

 

SEBI Circular CIR/MIRSD/64/2016 Dated 12th July, 2016 - Subject: Simplification of Account Opening Kit - KYC standard documents

Guidance Note - Do's and Don't For Trading On the Trading on the Exchange For Investors

Rights & Obligations including additional rights & obligations in case of internet wireless

Rights and Obligations of beneficial owner and depository participant asprescribed by SEBI and depositories

Uniform Risk Disclosure Documents

 

Customers can send in their grievances to:

grievances@bonanzaonline.com

 

For DP related complaints clients may send their grievances to:

dpsupport@bonanzaonline.com

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