Currency Derivatives

The Balance of Payments in India mainly relies on services exports, remittances and the course capital flows, both foreign direct investments (FDI) and FII. It is very essential that all market participants, such as banks and other intermediaries be provided with the wherewithal so that they can undertake a risk management in a way that is scientific. One of the ways to access domestic, foreign exchange markets is to hedge on the underlying foreign exchange exposures. In addition, the facilities that are available as the booking of forward contracts were included in the domestic forex market in order to evolve and acquire volumes and depth (Sumanth, 2012). Some of the newer hedging instruments have put in place swaps and options in the

The presentation was scheduled for the first week of December 1990. Mr. Pross outlined the use of various derivatives, noting that they differed widely in their ability to reduce risk. If the company was, say, placing a large bid to buy a building abroad, one might prefer to use foreign currency options to hedge the currency risk in the event the deal fell through. He argued, however, that foreign currency futures were best suited to hedge the fluctuations in revenues arising from currency movements. Mr. Pross proposed a plan to hedge currency risk using futures which

The HSE was first recognized by the Government of India on 29th September 1958 as Securities Regulation Act was made applicable to twin cities of Hyderabad and Secunderabad from that date. In view of substantial growth in trading activities, and for the yeoman services rendered by the Exchange, the Exchange was bestowed with permanent recognition with effect from 29th September 1983.The Exchange has a significant share in achievements of erstwhile State of Andhra Pradesh to its present state in the matter of Industrial development.

Financial hedging is the use of hedging instruments - typically FX forwards, options and swaps - that are sold by foreign exchange brokers and banks to reduce company exposure to currency fluctuations. (Export Development Canada, 2016) Acknowledging that foreign exchange risk is a real threat to corporate cash flows, assets and expenses can be one of the biggest hurdles for most companies. However, recognizing the importance of protecting assets companies can move forward in identifying the type and magnitude of the risk to implement strategies to mitigate them. The three most common types of foreign exchange risks are:

In 2005, the SEC’s responded to the advances in technology and the automation of exchanges with Regulation National Market System (“Reg. NMS”). Reg. NMS required that an order to buy/sell be routed to the exchange with the best price. Since there were multiple exchanges in different geographical locations this exacerbated market fragmentation which created pricing inefficiencies. In order to mitigate the effects of market fragmentation, exchanges and trading venues were required to monitor security prices constantly through the Securities Information Processor feed (“SIP”). The SIP gathered quotes for securities across all public exchanges and exchanges were then required to route orders according to the best price.

Hull J C. Optionsfuturesand other derivatives seurities.3rd ed. Upper Saddle River: Prentice-Hall199749-141Brealey R, Kaplanis E. Discrete exchange rate hedging strategies. Journal of Banking and Finance, 1995, 19:765-784(Briys E, Solnik B. Optimal currency hedging

* Currency exposure is the extent to which the future cash flows of an enterprise, arising from domestic and foreign currency denominated transactions involving assets and liabilities, and generating revenues and expenses, are susceptible to variations in foreign currency exchange rates.

Foreign Study (“AIFS”). Archer-Lock is the controller of AIFS and Tabaczynski is the CFO of

Then, we took into consideration only a fluctuation of the exchange rate. The scenarios that we analyzed covers different positions of the dollar against the euro: weak dollar (USD 1,48/EUR), stable dollar (USD 1,22/EUR) and strong dollar (USD 1,01/EUR). Different coverage of costs with hedging was also introduced in the analysis. The three main policies are of not hedging, 100% hedging with forward contracts and 100% hedging with options.

The stock market in India is one of the efficient and dynamic markets for securities in Asia. Shares trading market started growing in India from 19th century when a bunch of stock brokers in Bombay formed Native Share and Stockbrokers Association in 1875. This association played a key role in devising the codes of conduct in stock broking industry and helped in mobilizing capital for investment in various corporate companies. It was later known as Bombay Stock Exchange, the oldest stock exchange of Asia. BSE National Index was launched by January 1989 and consisted of 100 stocks listed at 5 major exchanges in India.

Hedging foreign exchange risk protects from exchange rate fluctuations. Foreign currency forward contracts are to buy or sell foreign currency in a future date. Foreign currency option is right to buy or sell foreign currency or puts and calls. The advantages of forward contract are that contracts include the exact amount of a foreign currency, some specific

Moreover, stock exchanges would have a separate institutional trading platform for listing of start-ups from the new age sectors, including e-commerce firms, while the minimum investment requirement would be Rs. 10 lakh. It was launched to allow small and medium enterprises to list without an initial share sale.

Introduction Overview of the hedging techniques In the financial market, almost all of companies need to face the currency risk. In order to manage the currency risk, companies will use different hedging techniques, such as financial and operational hedging techniques. For example, money market, futures contracts, options and forwards contracts are commonly used by firms, as well as operational hedging techniques. All of 4 types of financial hedging techniques are short-term hedge. Money market is a part of financial markets for assets involved in short-term borrowing,lending, buying and selling. Its features are high liquidity, lower risk, such as treasury bills. Futures contracts are future transaction for buying or selling, and made

Great Eastern Toys is a company in Hong Kong that exports a huge percent of its total sales to the North American and European markets and hence is exposed to currency risk. Previously, the company was occupied with expanding their business and the company 's management had never given much attention to currency risk until their recent meeting with their banker. The banker pointed out that the depreciation of the European currencies during the previous two years had resulted in a substantial loss of income. The company 's management was indeed convinced that they should begin to devote more time and manage their currency position. In this report, we are going to explore the different options for Great Eastern Toys to hedge

* The Bombay Stock Exchange and the National Stock Exchange of India, the premier stock exchanges of India could function only partially. As most of the trading are eTrading, trading terminals of the brokerage houses across the country remained largely inoperative. Ironically, in partial trading, the Sensex, India's most tracked equity index closed at an all time high of 7605.03 on 27 July 2005. The Exchanges, however, remained closed for the following day.