I JUST ATTENDED A FIEO ( FEDERATION OF INDIAN EXPORTERS ) SEMINAR TODAY MORNING .
SHAREKHAN ACTUALLY WAS A PARTNER SPONSOR OF THE SEMINAR .
AND SHOWED HOW HOW EXPORTERS & IMPORTERS CAN HEDGE CURRENCY BY BUYING FORWARD CONTRACTS OR FUTURE CONTRACTS FROM SHAREKHAN INSTEAD OF THEIR OWN RESPECTIVE AD-BANKS .
MARGIN REQUIREMENTS OF SHAREKHAN WERE MUCH LESS COMPARED TO BANKS .
I WONDER IS THIS LEGAL ???
You absolutely can hedge on the stock markets itself. Stock exchanges have only future contracts.
Even the option contracts on currency is quite liquid, so gives a lot more flexibility to hedge positions.
Going to the exchanges to hedge vis-a-vis a bank is a no-brainer. The only issue at the exchange is that you can’t run a position bigger than 15 million dollar. So most big corporate end up going to the bank.
thank you mr.nithin ,
i still don’t understand how this system will work ???
when we use bank hedging , all we need to do is provide contract details when the payment arrives
to our respective bank .
how exactly do we communicate with bank that we have hedged the currency on stock market direct ???