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•Multi Commodity Exchange of India Ltd (MCX) is an independent commodity exchange based in India. •It was established in 2003 and is based in Mumbai. •MCX offers futures trading in bullion, ferrous and non-ferrous metals, energy, and a number of agricultural commodities (mentha oil, cardamom, potatoes, palm oil and others).

•A futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today (the futures price or the strike price) with delivery occurring at a specified future date, the delivery date. •They are traded in futures exchange.

A currency future or ‘futures exchange’ is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date.

•MCX Stock Exchange (MCX-SX) is an India-wide electronic platform for trading in currency futures. •It functions under the regulatory control of Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI). •It is tly promoted by Financial Technologies and Multi Commodity Exchange of India Ltd (MCX). • It started operations on the 6th of October 2008 •Headquarters-Andheri (East), Mumbai, India

•MCX-SX is 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 had 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. •MCX-SX currently witnesses participation from 555 towns and cities across India and has a strong member base of 734.

References:-http://www.mcx-sx.com/SitePages/mkt_data.aspx

•The management of the Company is headed by Mr. Joseph Massey, Managing Director & CEO, who is in overall charge of the affairs of the Company, subject to the superintendence and oversight of the Board of Directors. •The CD segment, which is the currently operational segment of MCX-SX is headed by Mr. U. Venkataraman, CEO-CD Segment & Whole-time Director, who reports to the Managing Director. •There is a team of highly experienced senior management personnel leading different Departments of the Exchange, which reports to the Managing Director and the Whole-time Director.

•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. •MCX-SX, till now, has conducted more than 600 investor education programmes across the country, averaging almost one per working day. •It started live operations by launching monthly contracts in the USD/INR currency pair. Each USD/INR contract on MCX-SX has a life of 12 months from the month in which it was launched.

A wide range of financial market participants -- hedgers (i.e. exporters, importers, corporate and banks), investors and arbitrageurs are benefitted by price discovery and price risk management on the transparent trading platform of MCX-SX. 1) Hedgers: MCX-SX provides a high-liquidity platform for hedging against the effects of unfavourable fluctuations in foreign exchange rates. Banks, importers, exporters and corporate can hedge on MCX-SX.

2) 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. 3) 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.

•MCX Stock Exchange Ltd (MCX-SX), India’s new stock exchange. •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 – 1)Euro-Indian Rupee (EURINR) 2)Pound Sterling-Indian Rupee (GBPINR) 3)Japanese Yen-Indian Rupee (JPYINR). •It appositely reflects how the world’s most evolved and hitech new-generation exchanges should look like in future. •MCX-SX has been spearheading financial literacy and financial inclusion in India, as is envisaged by the Government of India.

Example 1: Given:-

•Suppose an edible oil importer wants to import edible oil worth USD 100,000 •He places his import order on July 15, 2008. •The delivery date being 4 months ahead. •At the time when the contract is placed, in the spot market, one USD was worth say INR 44.50. •Suppose the Indian Rupee depreciates to INR 44.75 per USD when the payment is due in October 2008. •The value of the payment for the importer goes up to INR 4,475,000 rather than INR 4,450,000. •The hedging strategy for the importer, thus, would be:

Example 2: Given:-

•A jeweller who is exporting gold jewellery worth USD 50,000. •He wants protection against possible Indian Rupee appreciation in Dec ’08, i.e. when he receives his payment. •He wants to lock-in the exchange rate for the above transaction. • His strategy would be:

The net receipt in INR for the hedged transaction would be: 50,000 *44.35 + 15,000 = 2,217,500 + 15,000 = 2,232,500. Had he not participated in futures market, he would have got only INR 2,217,500. Thus, he kept his sales unexposed to foreign exchange rate risk.

•The IT infrastructure Exchange has been designed with performance, reliability, redundancy and security as the key parameters. •The technology deployed includes the latest fault tolerant servers and a hybrid network (nationwide satellite network, terrestrial point to point, nationwide MPLS network and Internet links) which enables to connect to the Exchange from any location across the country. •The IT components are hosted in a state of the art datacenter that is designed to mission critical operations. •The datacenter and all its components are monitored 24x7x365. •The global technology platform enables its to undertake uninterrupted dealing even during outage time experienced by other exchanges.

CERTIFICATION In continuation with its commitment to provide qualitydriven services to , MCX-SX has successfully cleared the ISO 9001:2008 Surveillance Audit and has been recommended for continuation of this certification.