ICE to Launch Real and Rupee Futures Contracts; First U.S. Exchange to Offer Rupee

Category: Financial Services,  News Source: The Wall Street Journal,  Updated-On: Nov 27 2012

IntercontinentalExchange (ICE) said it will launch two new cash-settled foreign exchange futures contracts focused on India and Brazil, as the derivatives exchange looks to capitalize on growing interest around emerging markets.

The new contracts involve the Indian rupee and the Brazilian real. They will launch for the trade date of Jan. 28.

"The addition of the Indian rupee and Brazilian real futures contracts recognizes the significant and increasing commercial importance of these nations," said ICE Futures U.S. Vice President Ray McKenzie. "In particular, interest in emerging market non-deliverable forward currencies from a range of market participants, including CTAs (Commodity Trading Advisors) and funds, has been growing in recent years."

The Indian rupee futures contract offered by ICE--the second-largest U.S. exchange company by market capitalization--is the first U.S. exchange futures contract on this currency.

The contracts will be listed on the ICE platform and are eligible for the waiver of exchange and clearing fees for electronically-executed currency pair futures, which extends into next year. The contracts also are available for exchange-for-physical transactions and block trading. ICE noted that there are no exchange-for-physical surcharges beyond the standard exchange and clearing fees of 30 cents per contract side for emerging market currencies.

In July, ICE said it had launched clearing for emerging markets credit default swap indexes. At the time, the exchange noted it was the first to offer real-time, trade-date clearing of the emerging markets credit default swap index for buyside and dealer-to-dealer trades.

Broader distribution and more familiar rules around futures trading are seen helping drive a rebound in business for ICE, which suffered over the summer as swap traders stepped back from off-exchange commodity markets ahead of stricter regulations.

The Atlanta-based exchange operator reported earlier this month that the slide in business from privately traded energy and financial products like swaps led to a 1.2% drop in third-quarter earnings.

Shares of ICE dropped 56 cents to $130.45 in recent trading. The stock has risen 15% in the past 12 months.

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