Good show by USE in inaugural trade

New bourse for currency derivatives, the United Stock Exchange of India (USE), began operations on Monday and witnessed good volumes in the first hour of trade.

After the National Stock Exchange and the Multi Commodity Exchange, USE is the third bourse offering currency trading in the country.

"We are witnessing good volumes and it (volumes) has already crossed Rs 2,000 crore in the first hour of trading," USE Director Gaurav Arora told reporters after the launch.

The exchange commenced operations in the all four currency pairs allowed by the Securities and Exchange Board of India (Sebi) - dollar-rupee, euro-rupee, yen-rupee and pound-rupee.

Currency derivatives can be described as futures contracts between the sellers and buyers, whose values are to be derived from the underlying assets - the currency amounts.

Worldwide, currency derivatives market is bigger than equities with volumes of $3-billion-a-day, while India's contribution is only one per cent. Hence, there is a greater prospect for growth, USE Head T S Narayanswamy said.

Reserve Bank of India Deputy Governor Shyamala Gopinath, who along with Sebi Chairman C B Bhave, inaugurated the bourse, said investors should start looking at currency trading as a new asset class.

Over-the-counter (OTC) activities are for those who have a underline commercial interest and want to hedge, but an instrument like this must be used by all residents, including those who want to speculate on currencies, Gopinath said.

USE is a bourse set up on public-private partnership with 21 public-sector banks, five top private banks, the Bombay Stock Exchange, state-owned entity MMTC and Jaypee Capital as stake holders.