MCX Stock Exchange (MCX-SX), India’s new stock exchange, commenced operations in the Currency Derivatives Segment on October 7, 2008 under the regulatory framework of Securities & Exchange Board of India (SEBI) and Reserve Bank of India (RBI). The Exchange is recognised by SEBI under Section 4 of Securities Contracts (Regulation) Act, 1956.

A new generation stock exchange, MCX-SX offers a world-class electronic platform for trading in currency futures contracts and is currently the market leader in this segment . Within a year of inception, MCX-SX has achieved a stupendous growth in average daily turnover and open interest. The average daily turnover increased from Rs 355 crore during its first month of operations to Rs 18,359 crore in March 2011. In line with global best practices and regulatory requirements, clearing and settlement is conducted through a separate Clearing Corporation MCX-SX Clearing Corporation Ltd. (MCX-SX CCL). MCX-SX currently witnesses participation from 555 towns and cities across India and has a strong member base of 734.

Adhering to a philosophy of ‘Systematic Development of Markets through Information, Innovation, Education and Research,’ MCX-SX has been spearheading financial literacy and financial inclusion in India, as is envisaged by the Government of India. MCX-SX, till now, has conducted more than 600 investor education programmes across the country, averaging almost one per working day, and has roped in a wide array of partners like the media, educational institutions, trade bodies and international organisations to jointly promote financial literacy and introduce global best practices in India.

MCX-SX offers trading in currency futures. Initially, trading in only US Dollar-Indian Rupee (USDINR) was allowed, but the regulators subsequently approved trading in three other currency pairs – Euro-Indian Rupee (EURINR), Pound Sterling-Indian Rupee (GBPINR) and Japanese Yen-Indian Rupee (JPYINR).
The currency futures contracts by MCX-SX provide Indian Importers, Exporters, Corporates and Banks another tool for effectively hedging their foreign exchange risks. These contracts also offer a better flexibility than the over-the-counter (OTC) market in terms of transparency in rates that is ensured by an electronic trading platform. MCX-SX provides the desired liquidity and depth to all members, be it Banks, corporate houses, brokerages or lay investors. Furthermore, all transactions are settled through its clearing corporation MCX-SX CCL, which enhances safety by eliminating the counter-party risk.

MCX-SX endeavours to ensure continuous innovation and to introduce various new products under the extant regulatory framework. The Exchange is in readiness to commence Equity segment and Equity Futures & Options segment besides other products such as Interest Rate Futures, SME segment securities, Index Funds and Exchange Traded Funds etc, on receiving regulatory approvals.

A wide range of financial market participants -- hedgers (i.e. exporters, importers, corporates and banks), investors and arbitrageurs are benefitted by price discovery and price risk management on the transparent trading platform of MCX-SX.

Hedgers: MCX-SX provides a high-liquidity platform for hedging against the effects of unfavourable fluctuations in foreign exchange rates. Banks, importers, exporters and corporates can hedge on MCX-SX.

Investors: All those interested in taking a view on appreciation (or depreciation) of exchange rates in the long and short term, can participate in the MCX-SX currency futures. For example, if one expects depreciation of Indian rupee against US dollar, then he can hold on long (buy) position in the USD/INR contract for returns. Contrarily, he can sell the contract if he sees appreciation of the Indian rupee. Similar, long or short positions can be taken in EURINR, GBPINR and JPYINR if investors see any fluctuation in the Indian currency against other currencies like Euro, Sterling Pound and Japanese Yen

Arbitrageurs: Arbitrageurs get the opportunity of trading in currency futures by simultaneous purchase and sale in two different markets, taking advantage of price differential between the markets.