Global Board of Trade, the first multi-asset class derivatives exchange from Mauritius has introduced the delivery mechanism to the existing cash settled USD-MUR contract.
The new feature of the contract will enable organizations and institutions to hedge currency risk more effectively as they would be able to take delivery of the contract value either in US Dollars or Mauritian Rupees on the expiry date. The futures contract of USD-MUR would offer enhanced liquidity, ensure transparency and anonymity in trading and eliminate counterparty default risk due to novation and settlement guarantee by GBOT clearing banks.
The Mauritius based organizations that have exposure to foreign exchange would now have a highly efficient and advanced currency risk management product that would overcome the drawbacks of the existing forward market. On the futures market, the participants trade on standardized contracts with daily mark to market settlement enabling entry into and exit from the contract at any point of time.
The key specifications of delivery based GBOT USD-MUR are as below:
- Contract Size: 10,000 USD
- Price Quotation: MUR per USD, quoted up to the second decimal place
- Initial margin: 4% or the margin level based on volatility, whichever is maximum
- Minimum Price Movement: 0.01 MUR per USD, equivalent to MUR 100 per contract
- Trading Hours: 1030hrs to 2030 hrs, Monday to Friday (Mauritius time)
- Delivery and Settlement Logic: Both cash settled or delivery based on the delivery intent of the participant received and matched at the exchange
- Clearing Banks:Banque des Mascareignes, Barclays Bank, SBI Mauritius
Sharing his rationale behind GBOT USD-MUR delivery based contract, Joseph Bosco, MD & CEO of GBOT said, “It is our vision to accelerate the development of the Mauritian financial markets by empowering its market participants with unique products that would make Mauritius a global case study for efficient financial risk management. This is our latest endeavour to ensure that Mauritius based organizations have financial tools of world class standards that will enhance their competitiveness in the global business arena. We assure our assistance to participants through education and awareness on the product and its mechanisms.”
While expressing his views on the product, Rundheersing Bheenick, Governor, Bank of Mauritius said, “I congratulate GBOT on yet another excellent initiative that will help to develop our foreign exchange and derivatives market. The outcries of our importers and exporters show their extreme vulnerability to the vagaries of global financial markets. With this USD-MUR delivery − based contract, GBOT will cater to the currency hedging needs of the export − and import-oriented Mauritian business houses. We expect to see among the participants unrelenting emphasis on efficient risk management infrastructure and encourage this ongoing development.”