Karvy Group

Karvy Stock Broking Limited

Karvy Comtrade Limited
Karvy Financial Services Limited
Karvy Realty (India) Limited
Karvy Capital Limited
Karvy Investor Services Limited
Karvy Data Management Services Limited
Karvy Computershare Private Limited
Karvy Insurance Repository Limited
Karvy Global Services Limited

Karvy Inc , USA

Karvy Global Services Inc , USA
Karvy Middle-East LLC, Dubai
Karvy Asia Pacific Pte Ltd , Singapore
Fakhro Karvy Computershare WLL, Bahrain

Karvy Financial Services for Corporates & Individuals

Corporate

Individuals

Currency Risk
Technically currency risk is variability in the
value of an exposure caused by uncertainty
about exchange rate changes.
Whether you are an individual
looking to travel abroad, or
planning to send money to
loved ones overseas, you will
be affected by currency
movement. Similarly, if you
are in business of imports or
exports of goods and services
you will either receive or
transfer money that will be
affected
by
currency
fluctuations.

Currency risk essentially comes from the

movement in the exchange rate between two
currencies.

If you are in business or individual looking to

reduce your currency risk and remove a
certain level of uncertainty from your future
currency transactions there is tool called as
HEDGING

Volatility & Its Impact On Business

Profits

Business Margins are ranging between 5 to 15%

Currency annual volatility can range from 5 % to 10%

If Unhedged Volatility can turn Profits to Losses.

Past Volatility is not a measure of future Volatility

Indian Currency still relatively less volatile than Others

Need to Manage Risks

Insure Against Adverse Exchange Rate movement

Project and protect Operating Profits

Forex Markets are Volatile and Uncertain

Achieve Budgets and Targets

Maintain sustainable business in light of stiff competition

Areas of Impact
Gross Revenues (Gross Rupee Revenue = Foreign
Currency Revenue x Current Exchange Rate)

From Financials
Perspective

EBIT/PAT (Due to mismatch in currency of Revenues &

currency of Expenses)
Balance Sheet (Translation impact for Foreign Currency
Current Assets & Fixed Assets)

From Business
Perspective

Committed orders with frozen pricing

Committed orders with open pricing

Key Hedging Principles

We make profits from our Key Business Activity

We need to Monitor and understand Risk

Hedging / Forex Trading is not the main business Activity

Business Needs to have a stable Forex Policy A MUST

You can not sell at Peak or Buy at Bottom

Basic Purpose is to protect Margins Or Marginally Gains

We need to take Calculated Risk & Not Blind Risk

Forex Hedging Tools

Various Hedging
Tools

Open
OPEN

FUTUREs

Could be
speculative

Basic
hedging tool

OPTIONs

Means of
Insurance

Combination

Optional
Effective

OTC VS Exchange CDS

Price Transparency

Forwards (Banks)

Futures (MCX-SX)

Spot+/-Forwards +/- Bankers margin

No Possibility of any Manual Intervention

Client Depends upon Bankers Discretion

100% Transparency Online Systems

Gain on cancellation paid on the maturity date -Only

Gain / Loss on Cancellation paid on Same Day Itself.
in Specific Underlying

Margin / Brokerage

2 Paise to 80 Paise per USD

0.25 Paise to 3 Paise per USD

Spread
Market Timings

Bid Ask Spread is 2 3 Paise

Bid Ask Spread is 0.25 Paise

9.00 am to 4.30 pm

9.00 am to 5.00 pm

Options Contracts

Tough Documentation & Restrictions

Available to all No Restrictions

Contract size

Customized: Generally Starting from USD 50,000

Contract size is in Multiple of 1000 Currency Units

(USD,GBP,EUR) & JPY in 100000

Credit Limits to be sanctioned and documentation to

be done for the process

Basic KYC Documents

Underlying documents is needed

No proof of underlying exposure needed

Marking to market is a periodical task and usually

done on request

Exchange traded currency futures have an inbuilt

mechanism of paying/receiving the mark to market
difference based on the Daily Settlement Price.

Subject to credit limits

High

Physical Delivery

Cash Settled

Documentation

Marking to market
Liquidity
Settlement

Indian Currency Futures Markets

Trading Hours

9:00 AM to 5:00 PM (Monday to Friday)

Contract Size

US$ 1,000

Price Quotation

INR per USD

Tick Size

INR 0.0025

Minimum Initial Margin

1.75% on first day & 1% thereafter

Contracts

All months with a maturity duration of 12 months

Settlement Mechanism

Cash Settled in Indian Rupee

Last Trading Day

2 working days prior to the last BD of the expiry month

Final Settlement Rate

RBI USDINR Reference Rate

Final Settlement Date

Last working day of month, except Saturday.

Options

Corporates can also be on the Sell side of the Option ( which is not
allowed in OTC Market).

Apart from plain Vanilla positions, its possible to have structures also,
by using various combinations of PUT and CALL options.

Combination strategies can also be used as Cost reduction structure.

Futures and Options can be used in Combination.

Hedging Strategy

Objective is
To Minimize
Forex Risk

100% Open
(Totally Exposed to Risk)

100%
Forwards
(A Loss Making
Proposition, at times
challenged
By RBIs guidelines)

Hedging
Alternatives

Mix of the
Three (Futures,
Options &
Forwards)
Best possible strategy

100% Options
(Warranted in acute volatility, comes at a premium)

Currency Derivatives @ Karvy

Currency Derivatives offered to clients from the

day of its introduction in India 29th August
2008

Membership with NSE, MCX-SX, USE and BSE

One of the leading Corporate brokers in
Currency Segment
Focus on Corporates with Forex exposure
Dedicated research & Corporate Desk
Exclusive CDS Branches at Hyderabad, Mumbai,
Kolkata, Delhi, Ahmedabad, Chennai,
Chandigarh, Ludhiana, Vishakapatnam,
Lucknow and Jaipur
Convenience of booking orders through our
wide network of branches spread across 500
cities, or through our online terminal.
Monday, December 29, 2014

Awards and Recognition

Zee Business award for Indias

Best Market Analyst in the
commodity fundamentals
Awarded by the Finance Minister
Shri Pranab Mukherjee

Currency Research & Advisory

Exclusive Currency Research Department
(supported by Fundamental, Technical, Derivatives
Analysts.)
www.moneycontrol.com publishes our currency reports
on a daily basis
Currency Insight a Daily Report on Indian currency
markets
SMS Services to all our clients and team members
Provides timely Economic data & market updates
Weekly and Monthly Research reports published based
Fundamental research
Special Event Base Reports like RBI Monetary meet,
Budget etc
Customised Hedging strategies for Importers &
Exporters
Intraday Trading calls on all the four currency pairs
with a success % of > 75% on a monthly basis with
good returns

Karvys Strength your Benefits

Study your exsposure, discuss and understand your risk profile and help you
devise risk management policy for your company
Provide customised hedging strategies using combination of forward / futures &
options
Dedicated team with specialisation in forex and arbitrage to guide clients

Complete confidentiality of your exposure data and our market advice

Regular meetings to discuss the FX strategy and review existing portfolio
performance
We comprehend your business operations and resultant Fx risk management
objectives
Forex managed accounts for HNI clients.
Karvy forex trading platform online & through branches, online back office
access

Contact Details
Rakesh : +919160777787/040-67406027
Email : corporate.currency@karvy.com
Currency Derivatives, Karvy Stock Broking Limited,
"Karvy House", 46 Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034.
Tel No :( +91-040) 44618553, 67406035

Disclaimer: This presentation has been prepared to provide awareness & information purpose only. While every effort has been made to assure the accuracy of
the information contained herein, any affirmation of fact in this presentation material shall not create an express or implied warranty that any example or description
is correct. This material has been made available on the condition that errors or omissions shall not be made the basis for any claims, demands or cause of action. The
information provided, has been taken from sources believed to be reliable, but is not guaranteed by KSBL as to accuracy or completeness , and is intended for the
purposes of education and information only. The Rules and Regulations of the Exchange should be consulted as the authoritative source on all contract specifications
and regulations.

Monday, December 29, 2014