New Delhi, Sept 9 (UNI) With the introduction of currency futures, the nation is closer to switching over to full convertibility of rupee which will have a significant impact on the asset flows and trading patterns, apart from expanding the number of stakeholders in the currency market, National Stock Exchange CEO and MD Ravi Narain said.
While addressing the industrialists under the CEO Lecture series organised by PHD Chamber in the capital today on ''Changing Face of the Exchange,'' Mr Narain observed that the forward market, though vibrant in India, had benefited only limited number of people.
But currency market will have a beneficial snowball effect on all those who will like to trade in the currency future market, he said.
The trading framework is transparent and enables the participants to benefit from the asset base created by the currency transactions.
The amount of regulation that the hedge fund will face, will go up in the time to come.
Regarding and exchange for SMEs, Mr Narain said it was entirely possible to create a liquid and transparent platform. However, the regulations of such exchanges should be simpler but not weaker.
Since the liberalisation the relevance of currency market has grown.
Earlier, major stakeholders of the currency market were importers and exporters who hedged the risk by taking forward cover for the currencies.
Now, everyone including a travelLer, small time businessmen, a parent remitting fees for the wards studying abroad are impacted by currency movements.
''Currency futures are going to impact their day to day transactions and how they conduct businesses,'' he added.
He underscored the need for India following best business practices to integrate more closely to the global markets. That would enhance the credibility of the economy and attract more investment and trade apart from driving down the cost.
Mentioning that world-over the exchanges are undergoing rapid changes, Mr Narain said those changes also would impact India in a significant way.
Historically, exchanges were opaque private clubs set up to cater to the needs of their members. As the concept gained acceptance and popularity, many significant changes had taken place in their functioning.
From a trading platform, it got transformed as ordinary business entities, with underlying stocks being traded in the same exchanges.
Regulations have come up to ensure transparency and accountability in the system. Cross border acquisitions and take ''over of exchanges by similar bodies became common. Yet, there are instances when exchanges are going back to their original framework of private liquidity pools,'' he added.
UNI AK SBA AS2122