Earlier no one really cared but now after RBI stressing on having exposure, guess brokers can’t take any chance now.
it’s best question
Almost like you’re not doing it on a completely digital exchange which reports all transactions to government, and after linking your PAN, aadhaar to those accounts and adding money from your bank account.
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I did a lot of reading on FEMA regulations… even positions in external benchmark linked derviates/etf’s is contracted exposure. So Nasdaq etf’s like mon100 or crudeoil/gold mcx would also be exposure. So should not be a problem at all to have exposure.
I think after consultation with RBI and SEBI and Government, Zerodha must go ahead with cross currency derivatives. Entire volumes will come there that was trading GBP,EUR,JPY. Currency trading is more stable and lot of traders trade it globally. Trillions of dollars. If RBI wants to keep INR trading in control its fine, but atleast let trades be allowed for top 10 currencies of the world.
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Just now RBI governor said in QNA session on policy rate decision, to trade currencies it is always required to have exposure and one can only hedge for that exposure, but till now participants misused it and mis interpreted so they reiterated it again on having exposure. Also this 1 month extension is given only to close positions for those who don’t have underlying exposure, he also said it is legal thing to have exposure if not that may come under violation of FEMA rules, so those who plan to trade currencies please don’t give random declarations, only provide after checking with your CA, if not just leave this segment as anyhow this will be dead only in coming days.
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As per my understanding of all the interviews on tv…the extension was made to find out a middle ground so that the traders still stay in the market and keep the liquidity intact and in that time being find out a solution for the future. The Rbi is really bothered about the big players who cause the price volatility in rupees…not people who deal with 100-200 lots…So they want to get a declaration from the traders so that if there is any big trade placed on the exchange (say worth 10-20 crores) Rbi can ask for a proof of underlying exposure…because the existing limit of 100 million dollars is very high…I think that is what the declaration is for…
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My colleague Vineet has written a blogpost on what constitutes underlying exposure and answered some questions that were asked on this thread. Underlining the Underlying Exposure – Z-Connect by Zerodha
If any of you have any questions, please feel free to post it on the above Z-Connect post.
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Venu, the post explains the FAQs, I would like to know why RBI took this step too.
Was the currency derivatives BAN implemented to reduce the devaluation of Rupee? If I club this news element with the BAN on owning International ETF/Funds, I guess both converge.
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Hi all,
I am a journalist with Bloomberg News. If you traded these currency derivatives and would like to talk about how you have dealt with the situation the last few days, please reach out to me at 9741638936. We are trying to get out the impact that this regulatory ambiguity has had on retail traders in our stories.
your credentials or authenticity?
You can see my Linkedin Profile here:
https://www.linkedin.com/in/ronojoy-mazumdar-894b33115/
Happy for anyone who wants to talk to connect over Linkedin initially as well, or reach out over email first at [email protected].
If you google “Ronojoy Mazumdar Bloomberg” the first link will take you to my author page to see my published stories Unfortunately as a new user here on tradingqna I’m not able to include more than one link in my post apparently?
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If you have already researched this subject, post your findings here. We can then arrange a zoom call to discuss further.
I am quite sure @Meher_Smaran Zerodha team may be interested in hosting this.
That’s an interesting suggestion. I’ll check whether I can get permission for something like a Zoom call or AMA. In the meantime the best I can do is link to stories we have done on this issue:
I’m holding Motilal Oswal NASDAQ ETF. Will it qualify as exposure in accordance with point a?
@VenuMadhav / @Sensibull , any idea on when Zerodha will introduce cross currency F&O, say EUR-USD. I couldnt find any big broker offering this and Zerodha could become the early bird here!
Also, if anyone is aware of where I can find an option chain for EUR-USD, I would be greatful!
Kotak has been offering it for ages
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I checked this. They do offer it. But there is no OI for even ATM strikes of EURUSD, GBPUSD
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These is no market for cross currencies and looks like it may not in near future also.
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