Exchanges to launch options in currency derivatives

Securities and Exchange Board of India (SEBI) Chairman CB Bhave today said stock exchanges would be launching options in currency derivatives shortly.
Delivering his inaugural address at the seminar on 'Investor Protection and Market Development' here, Mr Bhave said both the Reserve Bank of India (RBI) and SEBI had principally cleared the introduction of options in currency derivatives.
''The exchanges have applied to us and we are expecting to be able to take a decision about actually allowing the exchnages to launch currency derivatives very soon,'' he noted.
 Bhave said the introduction of options in currency derivatives comes after futures in currrency derivatives were introduced more than a year back.
''We are moving step-by-step and cautiously,'' he added.
Putting to rest the contention that there was a erosion of close to Rs 10,000 crore from the mutual fund industry due to the ban of entry load to the schemes, Mr Bhave said between August 1, 2009 and July 31, 2010, there was an inflow of Rs 63,000 crore and Rs 73,000 crore was redeemed by the investors.
Moreover, the Asset Management Companies (AMC) made three times profit from Rs 243 crore in 2008-09 to Rs 870 crore in 2009-10.
Bhave noted that the AMCs instead of trying to scuttle the new development should have tried to adjust to the new environment. There was an allegation that SEBI wanted distributors to work for free but the ground reality was that there was no prescription stopping the AMCs to pay the distributors. ''The AMCs should have probably spent more money for the development of the distributors, who were not yet tuned to the new environment,'' he noted.
He stressed the need to increase the investor awareness about Applications Supported by Blocked Amount (ASBA), which would enable investors to save interest.
''We are talking to merchant bankers to know the glitches in ASBA and there was need to increase the rate of investors applying for shares through ASBA,'' he added