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The customer can take positions in these currencies from anywhere across the country, after transferring the required margins, through his online trading account. A currency futures contract is a standardized form of a forward contract that is traded on an exchange.
It's an agreement to buy or sell a specified quantity of an underlying currency on a specified date at a specified price. Settlement for the customer is, however, done in Rupee terms and not in the foreign currency.
Customers who are interested in participating in currency futures market have to necessarily open a SBI FX Trade trading account. Upon receipt of the KYC compliant applicant form, the trading account of the client would be opened and an email would be sent to the client with the user name and password.
To trade in currency futures, the client needs to give the required margins upfront to the Bank. For example if a client buys a near month contract at Rs. Placing the Trade On the lines similar to equities, depending upon the perception of increase or decrease in value, the customer has to crystallize his views on the expected movement in the value of respective currencies.
Customers can then buy or sell the currencies accordingly on the currency futures trading platform. Contrarily, he can sell the contract if he sees appreciation of the Indian Rupee.
For example, if the Rupee one month is trading at Rs. He makes a gain of Rs. In case Rupee moves against his expectations and reaches Rs. The customer can square off his positions at any time during the period of the contract. Benifits of Trading in Currency Futures A wide range of financial market participants - hedgers i. This product offers the platform for hedging against the effects of unfavorable fluctuations in foreign exchange rates. If you are an importer you can 'buy' a currency futures contract to "lock in" a price for your purchase of actual foreign currency at a future date.
Thus you avoid the exchange rate risk that you would have otherwise faced. If you are an exporter, you can 'sell' currency futures on the exchange platform and lock in a sale price at a future date. You have an export receivable after two months and you find the current level very attractive. Then you can sell a two months currency futures contract at the current price of Rs.
So at the end of two months you get Rs. All those interested in taking a view on appreciation or depreciation of exchange rates in the short and medium term, can participate in the currency futures market. As per the Regulatory guidelines, all Resident Indians including individuals, companies or financial institutions are allowed to participate in currency futures market. In case of any other query, the client can write to. The KYC form collects the details of the customer, which would be kept confidential by the Bank.
Account Opening Form captures the details for the trading account and of the bank account to which the trading account is to be linked to. The Investor Rights and Obligations document specifies the right and duties of the client who wishes to open a currency futures trading account.
Risk disclosure document explains the various kinds of risks associated with the exchange traded currency futures. Guidance note details various do's and don'ts while trading on exchange. Policies and Procedures document details the policies set by SBI and the procedures it will follow pertaining to client's trading account. Tariff sheet specifies the various brokerage slabs in which the client can be classified into based on his monthly volumes.
The undertaking for sending the contract notes electronically enables the clients to receive the contract notes and other statements instantly. Lien marking is a unique facility offered by SBI for its clients. Through the lien marking facility offered by SBI, the client continues to receive interest on the lien marked amount till the time actual deals are done. In the case where the margins are transferred upfront, the client is deprived of the opportunity to earn interest. Upon execution of the deal on the exchange, the lien amount is reduced and debited to the client's account at the End of the day.
Calendar spread means risk off-setting positions in contracts expiring on different dates in the same underlying taken simultaneously. The spread positions require lower margins specified by the Exchange, and the benefit of the lower margins, if any, would be passed on to the client. In addition, contract notes and daily statements will be sent to you according to the regulatory guidelines. Can I do anything to safeguard the positions from being squared off on account of margin shortfall? Yes, you can always voluntarily add Margin by way of marking lien for additional amount at the time of placing order or at any point in time thereafter.
Having adequate margins will preclude sudden need for additional margin in case the market turns unfavourably volatile with respect to your position. It's always advisable for the clients to keep lien marked for higher amount to make room for additional cushion over and above the required margin and thereby reduce the possibility of square off, on account of extreme market movements.
A client marks lien for Rs. You can have following two Settlement obligations in Currency futures market: Exchange would automatically square off your position on the last day of the contract expiry.
Your position would be closed at the final settlement price as per the current regulations. Daily Settlement Obligations at Bank: This means that any daily obligation arising out of transactions in futures or EOD MTM on day T is settled on the immediate next trading day. This further means that if you have a debit obligation on day Tthe payment will have to be made on day T itself. Final Settlement Obligations at Bank: The client can request for unmark of the lien at any time. The following has to be noted in this regard.
We offer volume based incremental brokerage rates to suit various segments of the customers. Our brokerage rates are straight forward and dont carry any hidden charges. Provision for lien marking. The money continues to remain in the customer's account until the deal is done, thus earning him interest. Secure and Robust online platform. Product from India's most trusted and transparent Bank. What is Currency Futures? Last working day of the month.
After logging in, the client has to go to 'Fund Transfer', enter the amount of lien to be marked and is redirected to www. The updated lien amount can be seen on the onlinesbi homepage. The presentation about using the platform to place trades would be sent to the client via email after the opening of the SBI FX Trade account. What is the policy regarding inactive accounts? Accounts will be treated as inactive accounts if: User has not logged in for more than a year.
What is lien marking and how is it different from normal upfront transfer? How can I see the lien marked status and the updated trading limits? When the client marks lien for placing the trades, the lien status is updated on a real time basis in the onlinesbi homepage of the client. The client can also see the updated limits on the www. How is margin calculated on open position? What is meant by calendar spread? How is the margin calculation done in case of calendar spread? How can I view my open positions in Currency Futures?
Every day the settlement of open Currency futures position takes place at the Settlement Price declared by the exchanges for that day. The Base price is compared with the Settlement price and difference is cash settled.
What are my settlement obligations in currency futures? Pay in due to Brokerage and statutory levies on close out. Pay in due to applicable Taxes. Pay out due to return of margin collected. Is it compulsory to square off the position within the life of contract? When is the obligation amount debited or credited in my bank account? How can I unmark the lien and release the amount? The unmark requests placed before 5 PMwould be unmarked during the same day, canadian oil and gas companies in dubai the market hours.
The requests placed after 5 PM would be processed only at the end of next days trading hours. Therefore the client is expected not to use the amount, for which the unmark request was made, till the lien is released. In case the client uses this amount on the next trading day, the unmark request would be rejected.
All the customers would be initially assigned to one of the slab on the basis of the expected volume from the customer at the time of opening the account. The actual performance of the customer would be verified against the category volumes at regular intervals and the brokerage category would be modified accordingly.
Applicable taxes would be charged to the customer. The above rates can be changed anytime at the discretion of the Bank. Annual maintenance charges are waived for the first year. Monday to Friday 9.