The security and exchange board of India, SEBI, in its annual report for 2024-25 said that in the currency derivatives segment, the total premium turnover from futures and options across all exchanges fell by 84.8 per cent to Rs 14.7 lakh crore in 2024-25, down from Rs 96.7 lakh crore in 2023-24 amid limited participation. On January 05, 2024, the RBI issued a notification titled ‘Risk Management and Inter-Bank Dealings,’ which took effect on May 03. This directive stipulated that derivatives could only be utilised for hedging against foreign exchange rate fluctuations, thereby limiting market participation to hedgers only. This limited the participation of proprietary traders, who accounted for a predominant 67.7 per cent share in 2023-24 (which includes speculators and arbitrageurs) in the Indian currency derivatives market.
During 2024-25, currency options recorded steep fall in settled trades with premium and exercise settlement falling off by 97.3 per cent and 95.8 per cent, respectively, when compared to 2023-24, SEBI noted. Even in currency futures, MTM settlement fell by 27.4 per cent to Rs 9,574 crore from Rs 13,196 crore in 2023-24. Overall, value of settled trades in currency derivatives declined to Rs 10,426 crore in 2024-25 from Rs 26,093 crore in 2023-24, a significant fall of 60.0%.