STEP 1: Opening SBI FX Trade Account
Customers who are interested in participating in currency futures market have to necessarily open a SBI FX Trade trading account. The trading account will be linked to a Savings/ Current account specified by the customer in the account opening form. Currently, SBI offers the trading facility with National Stock Exchange of India (NSE).

The client can open SBI FX Trade account at Global Markets, Mumbai through the branch where he/ she maintains his / her operating account (SB or CA). KYC formalities in this regard as specified by SEBI and RBI need to be completed at the branch, who would forward KYC compliant application to Global Markets Mumbai for eventual opening of trade account.

Upon receipt of the KYC compliant applicant form, the trading account of the client would be opened and an email would be sent to the client with the user name and password.

STEP 2: Logging In & Upfront Allocation of Required Margins.
To trade in currency futures, the client needs to give the required margins upfront to the Bank. The margin is fixed at 5% of the value of the contract but can be modified by the Bank at its discretion depending on the market volatility.

For example if a client buys a near month contract at Rs.46 (i.e. notional value of the contract: 46 * 1000 = 46,000), he needs to pay upfront a margin of 5% (approx.), which amounts to Rs.2300 (5% * 46,000)

Logging In & Fund Transfer

• The client has to visit www.nowonline.in/sbifxtrade, where he has to enter the required details and log in.
• After logging in, the client has to go to 'Fund Transfer', enter the amount of lien to be marked and is redirected to retail.onlinesbi.sbi/personal, where he allocates the funds for the trade, by marking a lien. The updated lien amount can be seen on the onlinesbi homepage.

STEP 3: Placing the Trade
On the lines similar to equities, depending upon the perception of increase or decrease in value, the customer has to crystallize his views on the expected movement in the value of respective currencies. Customers can then buy or sell the currencies accordingly on the currency futures trading platform.

Example A:
For example, Rupee(USD/INR),one month is trading at Rs.47 and if one feels that Rupee would depreciate to Rs.49, he can enter into a long position, by buying a currency futures contract. If USD/INR for the same maturity period goes to Rs.49, he makes a gain of Rs.2 per dollar. So on a single contract of 1000$, he makes a gain of Rs.2000.

Example B:
,Contrarily, he can sell the contract if he sees appreciation of the Indian Rupee. For example, if the Rupee one month is trading at Rs.47 now and expects it to move to Rs.46, he can enter into a short position by selling a currency futures contract. If USD/INR rate for the same maturity period moves to Rs.46 he makes a gain of Rs.1 per dollar, on squaring off his position. He makes a gain of Rs.1000 on this contract. In case Rupee moves against his expectations and reaches Rs.49, then he loses Rs.2 per contract, i.e. Rs.2000 from the margin he has given up front. The customer can square off his positions at any time during the period of the contract.

Similar, long or short positions can be taken in EUR/INR, GBP/INR and JPY/INR if customers see any chances of fluctuation in the Indian currency against other currencies like Euro, Sterling Pound and Japanese Yen.

Benifits of Trading in Currency Futures
A wide range of financial market participants - hedgers (i.e. exporters, importers, corporates and banks), investors and arbitrageurs are benefitted by transparent price discovery and the ease of trade.

Hedgers: This product offers the platform for hedging against the effects of unfavorable fluctuations in foreign exchange rates. If you are an importer you can 'buy' a currency futures contract to "lock in" a price for your purchase of actual foreign currency at a future date. Thus you avoid the exchange rate risk that you would have otherwise faced. If you are an exporter, you can 'sell' currency futures on the exchange platform and lock in a sale price at a future date.

For example, consider that you are an exporter and USD/INR two month futures contract is currently trading at Rs.49 per dollar. You have an export receivable after two months and you find the current level very attractive. Then you can sell a two months currency futures contract at the current price of Rs.49. So at the end of two months you get Rs.49 per dollar on the due date, irrespective of the level of the Rupee.

Investors: All those interested in taking a view on appreciation (or depreciation) of exchange rates in the short and medium term, can participate in the currency futures market. As per the Regulatory guidelines, all Resident Indians including individuals, companies or financial institutions are allowed to participate in currency futures market. However, at present Non Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) are not allowed to participate in currency futures market.

The SBI FX Trade KYC booklet contains six documents specified by the market regulators and the Exchange. The KYC form collects the details of the customer, which would be kept confidential by the Bank.

Accounts will be treated as inactive accounts if:

Lien marking is a unique facility offered by SBI for its clients. Through the lien marking facility offered by SBI, the client continues to receive interest on the lien marked amount till the time actual deals are done. In the case where the margins are transferred upfront, the client is deprived of the opportunity to earn interest.

• When the client marks lien for placing the trades, the lien status is updated on a real time basis in the onlinesbi homepage of the client. It has to be noted that no separate entry would be passed in the account for lien marking/unmarking.
• The client can also see the updated limits on the www.nowonline.in platform on a real time basis. It is also available on POSITIONS -> RMS SUBLIMITS

Upon execution of the deal on the exchange, the lien amount is reduced and debited to the client's account at the End of the day.

It is arrived at by applying the Margin% on the value of net open position.

For example, the client has an open buy position in FUT-USDINR-27-Jan-2012 for 1 lot of 1000 qty @ Rs.50 and IM % for USDINR is 5%. In that case, margin at position level would be 1 * 1000 * 50 * 5% = Rs.2500

Calendar spread means risk off-setting positions in contracts expiring on different dates in the same underlying taken simultaneously.

For example, you take Buy position for 2 lots of 2000 qty in FUT-USDINR-27-Jan-2012 @ Rs.50 and Sell position for 1 lot of 1000 qty in FUT-USDINR-27-Feb-2012 @ Rs.55. Then 1 lot Buy position in FUT-USDINR-27-Jan-2012 and 1 lot Sell position in FUT-USDINR-27-Feb-2012 form a spread against each other and hence are called "Spread Position". This spread position would be levied spread margin % for margin calculation instead of IM%. In this example, the balance 1 lot of 1000 qty buy position in FUT-USDINR-27-Jan-2012 would be non-spread position and would attract initial margin.

The spread positions require lower margins specified by the Exchange, and the benefit of the lower margins, if any, would be passed on to the client.

You can view all your open futures positions by clicking on POSITIONS" - > POSITION TAB. You can see the positions on DAYWISE/NET WISE basis. Day wise positions are those built during the day, while NETWISE include the carried forward positions also.

The futures positions table gives details such as contract details, buy/sell position, Lots (no. of contracts), quantity, Buy order lots, Sell order lots, Base price, Last Traded Price (LTP), total margin blocked on open position and order level margin at underlying-group level.

In addition, contract notes and daily statements will be sent to you according to the regulatory guidelines.

Yes, you can always voluntarily add Margin by way of marking lien for additional amount at the time of placing order or at any point in time thereafter. Having adequate margins will preclude sudden need for additional margin in case the market turns unfavourably volatile with respect to your position.

It's always advisable for the clients to keep lien marked for higher amount to make room for additional cushion over and above the required margin and thereby reduce the possibility of square off, on account of extreme market movements.

Illustration: A client marks lien for Rs.2500 and enters into a position which has margin requirement of Rs.2500. If market witnesses so much intraday movement that MTM requirement takes away 90% of margin amount (Rs. 2250), the Bank reserves right to square off the positions of the client. If lien marked amount is not fully used up by margin requirement, square off will happen only if MTM requirement exceeds 90% of lien-marked amount.

• Daily EOD MTM is a mandatory feature of Currency futures Settlement Process, mandated by the regulators. Every day the settlement of open Currency futures position takes place at the Settlement Price declared by the exchanges for that day.
• The Base price is compared with the Settlement price and difference is cash settled. In case of profit/loss in EOD MTM, the account is respectively credited/debited. The position is carried forward to the Next day at the previous trading day's Settlement price at which last EOD MTM was run.
• The daily Profit/Loss on account of the MTM would be credited/debited to the customer's account on the next day.

You can have following two Settlement obligations in Currency futures market:

I. Daily Settlement Obligations: (Entries to be passed in the customer account on T+1 basis)

• Pay out/Pay in due to MTM Profit and loss.
• Pay out/Pay in due to margin requirement of 5%. (Excess margin over 5%, would be credited to customer's account, while shortfall below 5%, would be debited from the customer's account)
• Pay in due to Brokerage, applicable taxes and statutory levies

II. Final Settlement Obligations:

• Pay out/Pay in due to Profit and loss on close out.
• Pay in due to Brokerage and statutory levies on close out.
• Pay in due to applicable Taxes.
• Pay out due to return of margin collected.

No. Exchange would automatically square off your position on the last day of the contract expiry. Your position would be closed at the final settlement price as per the current regulations. The Final Settlement price shall be the Reserve Bank Reference Rate on the last trading day.

All Currency futures daily obligations are settled by exchange on T+1 basis and Final settlement obligations are settled by exchange on T+2 basis.

Daily Settlement Obligations at Bank: This means that any daily obligation arising out of transactions in futures or EOD MTM on day (T) is settled on the immediate next trading day. This further means that if you have a debit obligation on day (T), the payment will have to be made on day (T) itself. Whereas, if there is a credit obligation, amount would be credited in your account on T+1 day. If T+1 day is a holiday, credit would be given to your account on the next working day.

Final Settlement Obligations at Bank: Your final settlement obligation will be settled in the same manner as the daily obligations except that your credit obligation will be credited to your account on T+2 day or on a subsequent working day, if T+2 is a holiday.

The client can request for unmark of the lien at any time. The following has to be noted in this regard.

• For unmarking the lien, client should go to the REQUESTS page on his onlinesbi home page and choose SBI FX TRADE and enter the amount to be unmarked.
• The unmark requests placed before 5 PM , would be unmarked during the same day, after the market hours.
• The requests placed after 5 PM would be processed only at the end of next days trading hours.
• Therefore the client is expected not to use the amount, for which the unmark request was made, till the lien is released. In case the client uses this amount on the next trading day, the unmark request would be rejected.

We offer volume based incremental brokerage rates to suit various segments of the customers. Our brokerage rates are straight forward and dont carry any hidden charges.

Note:

• All the customers would be initially assigned to one of the slab on the basis of the expected volume from the customer at the time of opening the account.
• The actual performance of the customer would be verified against the category volumes at regular intervals and the brokerage category would be modified accordingly.
• Applicable taxes would be charged to the customer.
• The above rates can be changed anytime at the discretion of the Bank.
• Annual maintenance charges are waived for the first year.