Trader and retail investor interest in currency futures, of late, has significantly added to the revenue stream of broking houses. The interest in currency futures is against the backdrop of the equity markets remaining subdued for some time and the rupee witnessing a large degree of volatility during the past one month.
Brokerage houses, in accordance with the interest in currency futures, have kept the commission for trading in it at a competitive rate, compared to other equity and commodity products.
CJ George, MD, Geojit Financial Services Ltd, said, ?Revenue from currency futures trading has already reached 10% of our total revenue. Majority of the traders in the currency futures market are retail clients, especially ones who have NRIs as relatives.?
While Geojit charges a flat rate of Rs 10 per buy or sell in currency futures, others like Angel Broking and Nirmal Bang Securities are offering competitive rates based on the volume.
A sub broker with Nirmal Bang Securities said, ?Depending on the volume, we charge a brokerage anywhere between 0.02-0.05%, compared to 0.5% for equity trading.?
Naveen Mathur, head of Angel Commodities, which has recently launched its currency futures trading, said, ?Right now, it is too early to calculate the revenue composition from currency futures. However, we are seeing a lot of participation from mid-sized corporate houses. Though retail investors are showing interest in currency futures, trading is yet to pick up.”
Market experts say that with the lot size, margin requirement by the stock exchanges and brokerage charges remaining low, the sharp volatility in the rupee had caught the attention of a lot of speculators and traders to the currency futures counter.
Since the beginning of February this year, the rupee has depreciated nearly 5%, from 48.93 to 51.30 per dollar, as on Wednesday. Meanwhile, the near month currency futures closed at 51.44, indicating that the rupee will further depreciate against the greenback.
Since the introduction of futures trading in currency, trading volume has significantly picked up, with total daily traded quantity surging higher by 1,140% to 5.22 lakh, from 42,000 during September 2008.
