Why in the news
The National Stock Exchange wants to offer a new type of currency contract. Its IPO draft papers, lodged with SEBI on 17 June 2026, revealed that approval has been requested from the RBI.
Key facts
- Product: Quanto Cross-Currency Derivatives, also called Quanto Derivatives.
- Disclosure: DRHP filed with SEBI on 17 June 2026 for NSE’s coming IPO.
- Pending elsewhere: other SEBI approvals awaited for futures on thermal coal (Platts) and interest-rate derivatives linked to a corporate bond index.
- Market backdrop: ADTV in currency derivatives dropped from ₹35,000+ crore to roughly ₹5,000 crore in June 2026.
- Trigger for the slump: the April 2024 RBI rule demanding underlying contracted foreign-currency exposure.
- BSE’s currency derivatives volumes have stayed zero since January 2025.
How a Quanto contract works
- The investor takes a view on a pair of foreign currencies such as EUR/USD, GBP/USD or USD/JPY.
- The settlement currency, for example INR, is fixed beforehand at a pre-decided conversion rate.
- Only the movement of the foreign pair matters; no INR/USD or INR/EUR risk is carried.
- The notional quantity is adjusted to cancel settlement-currency risk, hence the name Quantity Adjusted.
- An expert, Uday Tardalkar, called this removal of risk its greatest strength.
| Aspect | Present rupee-pair contracts | Proposed Quanto contracts |
|---|
| Pairs | USD/INR, EUR/INR, GBP/INR, JPY/INR | Two foreign currencies, rupee not involved |
| Availability on Indian exchanges | Allowed | Cross pairs not yet available |
| Settlement risk | Rupee exposure present | None in settlement currency |
Why NSE wants it
- Revive the collapsed currency-derivatives volumes.
- Widen the product range beyond rupee pairs.
- Draw foreign investors who want exposure without INR risk.
- Bring trades now happening outside the exchange system onto a regulated domestic platform.
- Give Indian investors a better tool to hedge global currency exposure.
Who regulates what
| Regulator | Area |
|---|
| SEBI | Capital markets, equity and commodity derivatives; market infrastructure |
| RBI | Currency and interest-rate derivatives, government securities; product approval |
About NSE
- Full name: National Stock Exchange of India Limited; set up in 1992, recognised as an exchange in 1994.
- Headquarters: Bandra Kurla Complex, Mumbai.
- Category: Market Infrastructure Institution.
- MD and CEO: Ashishkumar Chauhan, since 2022.
- International arm: NSE International Exchange, a GIFT City subsidiary since 2016.
Exam angle
- Quanto expansion: Quantity Adjusted.
- DRHP: the preliminary document filed with SEBI before an IPO.
- ADTV: Average Daily Turnover Volume.
- Product approval for currency derivatives rests with the RBI.