Company History - Future Capital HoldiPrintCompany History:

April 2006:

The Company receives certificate of registration from RBI as to function as an NBFC.

August 2006:

Conversion from a private limited Company to a public limited Company.

July 2007:

Company becomes a systematically important NBFC

Jan 2008: Future Capital Holdings announces the fixing of the price band for its initial public offering between Rs. 700 to Rs. 765 per equity share. A total of 64.23 lakh equity shares of Rs. 10 each are on offer, which constitutes 10.16% of the post-issue paid-up capital of the company.

August 2010:

Mr. V. Vaidyanathan joins as Vice Chairman and Managing Director.

August 2010: Company starts Mortgages business

January 2011: Company launches Gold Loan business

March 2011:

FCH sells its 50% stake in FCH Centrum Direct Limited to Centrum Capital.

March 2011: FCH acquires 50% stake in FCH Centrum Wealth Managers Limited (Future Capital Securities Ltd.) from Centrum Capital.

April 2011: FCH announces launch of Financial Superstores in Future Group retail stores.

April 2011:

FCH launches wealth management business.

April 2011: FCH launches property broking services.

June 2011: Future Capital Financial Services, which is a 100% subsidiary NBFC merges with parent Future Capital Holdings.

June 2011: FCH launches 100% automation of Consumer Durable Financing business at store with 3 minute approvals. Sep 2011: FCH launches Wholesale Debt Syndication business.

Sep 2011: Future Capital Commodities Limited commences commodity broking.

Dec 2011:

CARE rating agency upgrades FCH long term debt rating from A+ to AA-

Jan 2012: FCH launches Two - wheeler Loans business.

March 2012: Future Capital Securities Limited (FCSL) launches online broking platform.

March 2012:

Company raises Rs. 200 crores of subordinated debt.

April 2012: Hon'ble High Court, Bombay approves merger of two 100% subsidiaries, FCH Securities & Advisors Limited (FSAL) and Future Capital Investment Advisors Limited (FCIAL) with Kshitij Investment Advisory Company Limited (KIACL), a 100% subsidiary of FCH.

Company Overview:

Future Capital Holdings Limited (FCH) is a provider of financial services across retail businesses and wholesale credit business. The company is preferred partners in helping its clients succeed in their businesses by providing innovative product solutions, high level of convenience & service supported by robust technology.

The company believes that MSMEs are largely underserved in India and hence this is a large business opportunity. Financing of MSMEs is the largest component of the businesses done by the company, which is over 40% of the company's business. The company is also capitalising on the growing consumption in India through financing consumer durables and two wheelers. The company also provides Gold Loans, Vehicle loans, and Home Loans.

Future Capital also provides debt finance and working capital finance to corporates against identified projects against security of receivables and inventories of the company. The cash flows from the projects are escrowed to Future Capital. The company also provides financing in the form of term loans to promoters of select corporates with proven track record against security of listed stock with adequate liquidity and value.

The company further believes that retail business provides ample opportunities for growth, provides for ample diversification over a larger pool of customers, and finally gives us the opportunity to meet multiple needs of the customer across lending, investments, insurance and broking. Hence over the last 2 years, the company has significantly increased retail portfolio as a percentage of the total portfolio, from 18% of the loan portfolio to 45% as of now, and plans to grow this further. The company has a team of over 1000 employees, who are experienced in the financial industry. The company's senior management have excellent track records and each of them have between 15-20 years of experience in financial services.

FCH has invested in People, Processes and Technologies and has placed a strong Credit and Risk Management Team. The credit team is a separate vertical within the organisation, which undertakes detailed credit analysis, and processes files after checking credit performance with credit bureaus.

Aakruti Holdings Ltd.

AAKHOL

Aasheesh Securities Ltd.AASSEC Abhinav Capital Services Ltd. ABHCAP ABIFIN ACTFIN

Abirami Financial Services (India) Ltd. Action Financial Services (India) Ltd. Ad-Manum Finance Ltd. ADFIN Adinath Exim Resources Ltd. Aditya Birla Money Ltd. APOSIN ADIEXI

Advance Powerinfra Tech Ltd. MARPOW Aeonian Investments Company Ltd. Ajcon Global Services Ltd. AK Capital Services Ltd. AKCAPS Alfavision Overseas (India) Ltd. ALFOVE Alka Securities Ltd. ALKSEC ALMCAP AJCGLO AEOINV

Almondz Capital & Management Services Ltd. Almondz Global Securities Ltd. ALMGLO Alpha Graphic India Ltd. ALPGRA Alpine Capital Services Ltd. ALPCAP

Amalgamated Electricity Company Ltd. AMAELE Amit Securities Ltd. AMISEC

Amulya Leasing & Finance Ltd. AMULEA Anand Credit Ltd. Anjani Finance Ltd. ANACRE ANJAFI

Ankush Finstock Ltd.

ANKFIN ANNINF APOLFI

Anna Infrastructures Ltd. Apollo Finvest (India) Ltd. Apple Finance Ltd. APPFIN

Aravali Securities & Finance Ltd. ARASEC Arcadia Mercantile Capital Ltd. ARCMER Ardi Investment & Trading Company Ltd. Ari Consolidated Investments Ltd. Arihant Capital Markets Ltd. Arihants Securities Ltd. ARISEC Arman Financial Services Ltd. ARMLEA ARICAP ARICON ARDINV

Aroma Enterprises (India) Ltd. SIRENT Aroni Commercials Ltd. AROCOM Artheon Finance Ltd. SALFIN ARUVAR

Arun Varun Trade & Investment Ltd. Aryaman Financial Services Ltd. ARYFIN Ashika Credit Capital Ltd. ASHCRE

Ashim Investment Company Ltd. (Amalgamated) Ashirwad Capital Ltd. ASHICA

ASHINV

Associated Finlease Ltd. ASSFIN Atharv Enterprises Ltd. ATHENT Athena Financial Services Ltd. ATN International Ltd. ATNINT Autoriders Finance Ltd. AUTFIN Axis Capital Markets (India) Ltd. AXICAP ATHFIN

Ayoki Mercantile Ltd.

AYOMER

B N Rathi Securities Ltd. BNRATS Baid Leasing and Finance Company Ltd. BAILEA Bajaj Finance Ltd. Bajaj Finserv Ltd. BAJAUT BAJAFI BAJAJA

Bajaj Holdings & Investment Ltd. Bajrang Finance Ltd. BAJFIN

Bala Techno Global Ltd. BALTEC Balmer Lawrie Investments Ltd. BALMEL Bampsl Securities Ltd. BAMSEC Banas Finance Ltd. BANFIN

Basil Infrastructure Projects Ltd. VBCFIN BCB Finance Ltd. BCBFIN

Bengal & Assam Company Ltd. BENAS Bentley Commercial Enterprises Ltd. Bervin Investment & Leasing Ltd. Beryl Securities Ltd. BERSEC BETINV BETGLO BENCOM BERINV

Beta-Kappa Investments Ltd. Betala Global Securities Ltd. BF Investment Ltd. BFINVL

Bhagyashree Leasing & Finance Ltd.

BHALEA BHABHU

Bharat Bhushan Finance & Commodity Brokers Ltd. Bharat Line Ltd. BHARLI Bhilwara Tex-Fin Ltd. BHITEX BIRCAP

Birla Leasing & Infrastructure Ltd.

BLB Ltd.BLBLTD Blue Blends Finance Ltd. Blue Chip India Ltd. BLUCHI BLUEB

Blue Circle Services Ltd. BLUCIR Bluechip Stockspin Ltd. BLUSTO BNK Capital Markets Ltd. BNR Udyog Ltd BNRUDY Brand Realty Services Ltd. SAHFIN BRECOR BNKCAP

Brescon Advisors & Holdings Ltd. Bridge Securities Ltd. BRIDSE

Brijlaxmi Leasing & Finance Ltd. BRILEA Brindaban Holding & Trading Ltd. Capital Trust Ltd. CAPTRU BRIHOL

Capman Financials Ltd. CAPFIN Ceejay Finance Ltd. Centrum Capital Ltd. CEEFIN CENCAP CEN21S CFLCAP

Century 21st Portfolio Ltd.

CFL Capital Financial Services Ltd. Chandrika Traders Ltd. CHATRA Chankya Investments Ltd.

CHANIN

Charms Industries Ltd. CHARMS Chartered Capital & Investment Ltd. CHI Investments Ltd.[Amalgamated] Choice International Ltd. CHOINT CHACAP CHIIN

Chokhani Securities Ltd. CHOSEC

Cholamandalam Investment & Finance Company Ltd. CIL Securities Ltd. CILSEC

CHODBS

Cindrella Financial Services Ltd. CINFIN Citi Port Financial Services Ltd. CITPOR Clarus Infrastructure Realties Ltd. CLIO Infotech Ltd. CMS Finvest Ltd. Comfort Intech Ltd. CLIINF CMSINF COMINT CONFIN CLARFI

Consolidated Finvest & Holdings Ltd. Consolidated Securities Ltd. Contil India Ltd. CONCRE CRB Share Custodian Services Ltd. Crystal Credits Corporation Ltd. CRYCRE Cubical Financial Services Ltd. CUBFIN

CONSEC

CRBSH

D B (International) Stock Brokers Ltd. Dahyabhai Sons Ltd. DAHSON DALSTR

DBINS

Dalal Street Investments Ltd. Database Finance Ltd. DATFIN Daulat Securities Ltd.

DAUSEC

Dazzel Confindive Ltd. DAZCON DCM Financial Services Ltd. Devine Impex Ltd. DCMFI

DEVIMP DEVLEA

Devki Leasing & Finance Ltd.

DFL Infrastructure Finance Ltd. DHAFIN DGP Securities Ltd. DGPSEC

Dhanlaxmi Cotex Ltd. Dharani Finance Ltd.

DHACOT DHARFI DHRCAP DHUINV

Dhruva Capital Services Ltd. Dhunseri Investments Ltd. DJS Stock & Shares Ltd. DJSSTO Dolat Investments Ltd. DOLINV

Dynamic Portfolio Management & Services Ltd. DYNPOR E-Metals India Ltd. EMIND

Edelweiss Financial Services Ltd.EDECAP Eicher Ltd. EICLTD

Ekam Leasing & Finance Company Ltd. EKALEA Elcid Investments Ltd. ELCINV Elcon Finlease & Industries Ltd. ELCOFI Elgi Industrial Products Ltd. [Amalgamated] Emkay Global Financial Services Ltd. Emporis Projects Ltd. NILCAP ENBTRA ELGFIN

EMKSHA

Enbee Trade & Finance Ltd. Esaar (India) Ltd. Escorts Finance Ltd. ESAIN ESCORF

Esquire Money Guarantees Ltd. ESQMON Essar Securities Ltd. Esskay Telecom Ltd. ETP Corporation Ltd. ESSSEC ESSKTE ETPCOR EXDTRA

Exdon Trading Company Ltd. Explicit Finance Ltd. EXPFIN

Fact Enterprise Ltd. Farry Industries Ltd. FE (India) Ltd. FINEYE

FACENT FARIND

Finalysis Credit & Guarantee Company Ltd. Finkurve Financial Services Ltd. SANLEA First Custodian Fund (India) Ltd. FIRCUS First Financial Services Ltd. FIRFIN FIRLEA FORTUF

FINCRE

First Leasing Company of India Ltd. Fortune Financial Services (India) Ltd. Four Dimensions Securities (I) Ltd. Frontier Leasing & Finance Ltd. FROLEA Frontline Securities Ltd. FROSEC Futuristic Securities Ltd. FUTURS Futuristic Solutions Ltd. FUTSOL Gallops Enterprise Ltd. FICLEA Gandhinagar Leasing & Finance Ltd. Ganesh Holding Ltd. GANHOL

FOUDIM

GANLEA

Ganon Trading & Finance Company Ltd. GANTRA Garnet International Ltd. GCV Services Ltd. GUJCAP GDLLEA GARINT

GDL Leasing & Finance Ltd. GDR Media Ltd. GDRMED

GE Capital Transportation Financial Services Ltd GECAPT Geefcee Finance Ltd. GEEFIN GEMINV

Gemstone Investments Ltd.

Genus Commu-Trade Ltd.

GENUSC GEOJIF

Geojit BNP Paribas Financial Services Ltd. GFL Financials India Ltd. GOYFIN GK Consultants Ltd. Glance Finance Ltd. GKCONL GLAFIN

Global Capital Market & Infrastructures Ltd. Global Infratech & Finance Ltd. ASICAP Global Land Masters Corporation Ltd. Global Securities Ltd. GLOSEC GOGINT GOLROC GOLFIN GOLSEC MAJSEC

GLOCAP

Gogia Capital Services Ltd. Gold Rock Investments Ltd. Goldcrest Finance (India) Ltd. Golden Goenka Fincorp Ltd.

Golden Legand Leasing & Finance Ltd. GOLLEG Golechha Global Finance Ltd. Gowra Leasing & Finance Ltd. GSB Finance Ltd. GSL Securities Ltd. Gujarat Fiscon Ltd. Gujarat Investa Ltd. GSBFIN GSLSEC GUJFIS GUJINV GUJLEA HARCAP GOLGLO GOWLEA

Gujarat Lease Financing Ltd. Harmony Capital Services Ltd.

Harvic Management Services (India) Ltd HARMAN Haryana Capfin Ltd. Hasti Finance Ltd. HARYCA HASFIN

HB Leasing & Finance Co Ltd. HB Portfolio Ltd. HB Stockholdings Ltd.

HBLEA

HBPORL HBSTOL HEAINV HEMIND

Healthy Investments Ltd.

Hemakuta Industrial Investment Co. Ltd. Himalchuli Food Products Ltd. HIMFOO HSBC InvestDirect (India) Ltd. Hybrid Financial Services Ltd. IFL Promoters Ltd. IFSL Ltd. IFSLTD INDGRE IKASEC IFLPRO ILINV MAFFIN

IITL Projects Ltd.

Ikab Securities & Investment Ltd. IKF Finance Ltd. IKFFIN IL&FS Investment Managers Ltd. IMC Finance Ltd. Inani Securities Ltd. IMCFIN INASEC INCAFI

ILFIN

Incap Financial Services Ltd.

Indbank Merchant Banking Services Ltd. INDMER Indergiri Finance Ltd. INDFIN INDCEM

India Cements Capital Ltd. India Infoline Ltd. INDINL

India Lease Development Ltd. India Securities Ltd. INDSEC

INDLEA

Indiabulls Financial Services Ltd. INDIAF Indiabulls Securities Ltd. INDISE

Indiaco Ventures Ltd. IndiaNivesh Ltd.INDIA3

INDVEN

Indo Asia Finance Ltd. INDASI Indo Credit Capital Ltd. INDOCR Indo Thai Securities Ltd. INDTHA Indus Finance Corporation Ltd. SUBFIN Industrial & Prudential Investment Company Ltd. Industrial Investment Trust Ltd. INDUS1 Innovassynth Investments Ltd. INNINV Innovation Securities Ltd. Innoventive Venture Ltd. Intec Capital Ltd. INTSEC INTCAP INTFIN INTEFI INNSEC PLAOCE INDU

Integra Capital Management Ltd. Integrated Finance Company Ltd. Integrated Financial Services Ltd. Intellivate Capital Ventures Ltd. KBSTEL Inter Globe Finance Ltd. INTGLO Interface Financial Services Ltd. INTFIS Inventure Growth & Securities Ltd. ISF Ltd. INTSTA Ishwarshakti Holdings & Traders Ltd. Jagsonpal Finance & Leasing Ltd. Jay Energy and S. Energies Ltd. JAYENE Jayabharat Credit Ltd. JAYCRE Jayant Mercantile Ltd. JAYMER

INVGRO

ISHHOL JAGFIN

Jenson & Nicholson Financial Services Ltd. Jhaveri Credits & Capital Ltd. Jindal Capital Ltd. JINCAP JHACRE

JENSO

Jindal South West Holdings Ltd. JINSOU JJ Finance Corporation Ltd. JK Investo Trade (India) Ltd. JM Financial Ltd. JMFINL JOICAP JJFINC JKINVT

Joindre Capital Services Ltd. Joy Reality Ltd. MADLEA JPT Securities Ltd. JRG Securities Ltd. Jumbo Finance Ltd. JPTSEC JRGSEC JUMFIN

Jupiter Industries and Leasing Ltd. Jyothi Infraventures Ltd. K Z Leasing & Finance Ltd. Kadvani Securities Ltd. KADSEC Kailash Auto Finance Ltd. KAIAUT BOSSEC KZLEA

JUPIND

Kalyani Investment Company Ltd. Kamalakshi Finance Corporation Ltd. Kampani Consultants Ltd. Kartik Investment Trust Ltd. KBS India Ltd. Key Corp Ltd. KBSCAP KEYCOR

KALYIN KAMFIN

KAMCON KARTII

Keynote Corporate Services Ltd. KEYNCO KGN Industries Ltd. KGNIND

Khandwala Securities Ltd. Kiduja India Ltd.KIDUIN Kinetic Trust Ltd. KINTRU

KHASEC

Kirloskar Brothers Investments Ltd. Kirloskar Investment & Finance Ltd. KJMC Financial Services Ltd. KJMFIN

KIRLOS KIRINV

KJMC Global Market (India) Ltd. KJMGLO KLG Capital Services Ltd. Kojam Fininvest Ltd.[Merged] Kosian Industries Ltd. KOSIND GREINV KOVINV KLGCAP KOJFIN

Kothari World Finance Ltd.

Kovalam Investment and Trading Co. Ltd. Kratos Energy & Infrastructure Ltd. Kreon Financial Services Ltd. TATIFI DILVIK

Krishna Deep Trade & Investments Ltd. KRIDEE Kshitij Investment Ltd. KSHIIN Kuberkamal Industrial Investments Ltd. KUBIND Kumbhat Financial Services Ltd. KUMFIN Kwality Credit & Leasing Ltd. L&T Finance Holdings Ltd. Ladderup Finance Ltd. LADDFI Lakshmi Finance & Industrial Corporation Ltd. Lead Financial Services Ltd. Leena Consultancy Ltd. LEECON Libord Securities Ltd. LIBSEC LEAFIN LAKFIN KWACRE L1

LKP Finance Ltd. Lloyds Finance Ltd. Lohia Securities Ltd.

LKPMER LLOFIN LOHSEC

Lyons Industrial Enterprises Ltd. LYOIND M B Parikh Finstocks Ltd. MBPARF

Madhur Capital & Finance Ltd. MADHCA Madhusudan Securities Ltd. Magma Fincorp Ltd. Magnum Ltd. MADSEC

MAGSHR

MAGLTD MAHRAS

Maha Rashtra Apex Corporation Ltd. Mahan Industries Ltd. MAHANI

Maharashtra Corporation Ltd. MAHOVE Mahaveer Infoway Ltd. MAHLEA Mahindra & Mahindra Financial Services Ltd. Manappuram Finance Ltd. MANGEN MANIFI MAHI

Manipal Finance Corporation Ltd. Mansi Finance (Chennai) Ltd. Margo Finance Ltd. INDOFI MANSFI

Marigold Glass Industries Ltd. Market Creators Ltd. Maruti Securities Ltd.

MARGLA

MARCRE MARSEC MARCAP

Marvel Capital & Finance (India) Ltd. Master Trust Ltd. MASTRU

Mathew Easow Research Securities Ltd. MATEAS Matra Realty Ltd. MATREA

MCC Investment & Leasing Company Ltd. McDowell Holdings Ltd. MCDHOL Mefcom Capital Markets Ltd. MEFCAP

MCCINV

Mega Corporation Ltd. MEGCOR Mega Fin (India) Ltd. MEGFIN

Mehta Integrated Finance Ltd. MEHINT Mehta Securities Ltd. MEHSEC MERTRA BIOGRE

Mercury Trade Links Ltd.

Meuse Kara & Sungrace Mafatlal Ltd. Microse India Ltd. MICIND

Microsec Financial Services Ltd. MICRFI Mideast Portfolio Management Ltd. Mindvision Capital Ltd. KAIFIC Minolta Finance Ltd. MINOFI MODFIN MODSHA MIDPOR

Model Financial Corporation Ltd. Modern Shares & Stock Brokers Ltd.

Money Matters Financial Services Ltd. DOVSEC Monotona Securties Ltd. Monotype India Ltd. MONSEC

MONOTI

Moongipa Capital Finance Ltd. MOOCAP Morarka Finance Ltd. MORFIN

Morgan Ventures Ltd. MORVEN Motilal Oswal Financial Services Ltd. Motor & General Finance Ltd. MOTGE MOUTRA MOTOSW

Mounteverest Trading & Investment Ltd.[Merged]

MSR India Ltd. STALEA Mudit Finlease Ltd. MUDFIN MUKBAB

Mukesh Babu Financial Services Ltd.

Mukunda Industrial Finance Ltd.MUKIND Multiplus Holdings Ltd. MULHOL Multipurpose Trading & Agencies Ltd. Munoth Capital Market Ltd. MULTTR

MUNCAP

Munoth Financial Services Ltd. MUNFIN Muthoot Capital Services Ltd. Muthoot Finance Ltd. MUTCAP

MUTFIN

Nagreeka Capital & Infrastructure Ltd. NAGCAP Nahar Capital & Financial Services Ltd. NAHCAP Nalin Lease Finance Ltd. NALLEA Nalwa Sons Investments Ltd. NALSON

NCL Research & Financial Services Ltd. NCLRES NDA Securities Ltd. NDASEC SHRLAK NETFIN

Neelkanth Technologies Ltd. Netflier Finco Ltd.[Merged]

Network 18 Media & Investments Ltd. NET18F Networth Stock Broking Ltd. Nicco Uco Alliance Credit Ltd. Nikki Global Finance Ltd. NETSTO NICUCO NIKGLO NIVMER

Nivedita Mercantile & Financing Ltd. Niyati Industries Ltd. NIYIND

Nova Publications India Ltd.

SRUSHA

NPR Finance Ltd.

NPRFIN

Nu-Tech Corporate Services Ltd. NUCOR Oasis Media Matrix Ltd. OASMED Oasis Securities Ltd. OASSEC OCEINF

Ocean Infrastructure Ltd.

Octav Investments Ltd.[Amalgamated] OCTINV Odyssey Corporation Ltd. Onelife Capital Advisors Ltd. Optiemus Infracom Ltd. AKAFIN Oscar Investments Ltd. OSCINV Oseaspre Consultants Ltd. Oswal Agro Mills Ltd. Oswal Leasing Ltd. OSECON ODYCOR ONECAP

OSWAAG OSWLEA

Out of City Travel Solutions Ltd. TILFIN P H Capital Ltd. PHCAPL Pal Credit & Capital Ltd. PALCRE Pankaj Piyush Trade & Investment Ltd. PANPIY Parag Shilpa Investments Ltd. Paragon Finance Ltd. PARFIN PARCRE PARSHI

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Pilani Investment and Industries Corporation Ltd. Pioneer Investcorp Ltd. PIOINV PNB Gilts Ltd. PNBGIL POLYTI DEAIN

PILINV

Polytex India Ltd.

Pooja Entertainment and Films Ltd. Pramada Finvest Ltd PRAFIN

Praman Capital Market Service Ltd. Premier Capital Services Ltd. PRECAP

PRAMCA

Premium Capital Markets & Investments Ltd. Prerna Infrabuild Ltd. Prime Securities Ltd. Prism Finance Ltd. PREINF PRISEC PRISFI

PREMCA

Prism Medico and Pharmacy Ltd. Prithvi Softech Ltd. PRITSO

WOOMER

Priti Mercantile Company Ltd. PRITME Profin Capital Services Ltd. Provestment Services Ltd. PROFIN PROSER

PTC India Financial Services Ltd. PTCIND Pulsar International Ltd. PULINT Pyramid Trading & Finance Ltd. PYRTRA R B Gupta Financials Ltd. Raasi Enterprises Ltd. Rajath Finance Ltd. Rane Holdings Ltd. Ranjit Securities Ltd. RAAFIN RAJAFI RANHOL RANSEC RBGUPF

Rapid Investments Ltd. RAPINV Ratnabali Capital Markets Ltd. RATCAP Ratni Investments Company Ltd. Ravindra Energy Ltd. RAVITR RATINV

Regal Entertainment & Consultants Ltd. REGAEN Regency Trust Ltd. Reliance Capital Ltd. REGTRU RELICA

Relic Technologies Ltd. RELICT Religare Enterprises Ltd. Remi Securities Ltd. RELIGE

REMSEC RICCAP MADFIN

Rich Universe Network Ltd. Rishab Financial Services Ltd. Rose Investments Ltd. ROSINV Roselabs Finance Ltd. ROSFIN

Royal India Corporation Ltd. RR Financial Consultants Ltd. RR Securities Ltd. RRSECL

NATFIN RRFINC

S P Capital Financing Ltd. Safal Securities Ltd. ARRSEC

SPCAPF

Sagar Productions Ltd. KIRFIN Sai Capital Ltd. SAICAP Sai Industries Ltd. SAIIND ALAFIN

Sai Jeevadhara Finance Ltd. Sakthi Finance Ltd. Sam Leaseco Ltd. SAKFIN

SAMLEA

Samarth International Finlease Ltd. Sampada Chemicals Ltd. Samyak International Ltd.

SAMINT

SAMCHE SAMYIN

Sanghi Corporate Services Ltd. SANCOR Sanket International Ltd. Sanmitra Commercial Ltd. SANINT SANMIC SARCOM

Saraswati Commercial (India) Ltd. Sarthak Global Ltd. Satyam Silk Mills Ltd. Savani Financials Ltd. SARGLO SATSIL SAVFIN

Sawaca Business Machines Ltd. SAWFIN SCIL Ventures Ltd. SDFC Finance Ltd. SE Investments Ltd. SECUCA SDFFIN SEINVL SHAFIN

Shalibhadra Finance Ltd. Shardul Securities Ltd. SHASEC

Shell Mercantile Corporation Ltd. Sheroton Properties & Finance Ltd. Shrachi Infrastructure Finance Ltd. Shree Mahaganga Sugar Mills Ltd. Shree Rang Mark Travels Ltd.

SHEMER SHERPR SHRINF SHRMAH

SHRRAN SHRRAS

Shree Rani Sati Investment & Finance Ltd. Shree Salasar Investment Ltd. SHRSAL

Shree Shaleen Investments Ltd. SHREES Shreekarni Corp Ltd. UCILEA

Shreenath Commercial & Finance Ltd. Shricon Industries Ltd. SHRIIN

SHRCOM

Shriram Asset Management Company Ltd. Shriram City Union Finance Ltd. SHRCIT Shriram Transport Finance Company Ltd. Shyamal Holding &Trading Ltd. SHYHOL Shyamkamal Investments Ltd. SHYINV Siddha Ventures Ltd. SIDDVE SIEFIN

SHRASS

SHRITR

Siel Financial Services Ltd. Sigrun Holdings Ltd. SIL Investments Ltd. GEEKFI SILINV

Simplex Trading & Agencies Ltd. SIMPTR Sindhu Trade Links Ltd. BHACON Sita Enterprises Ltd. SKP Securities Ltd. SKS Microfinance Ltd. SITENT SKPSEC SKSMIC SMICAP SOBMER SOMDA

SMIFS Capital Markets Ltd. Sobhagya Mercantile Ltd.

Som Datt Finance Corporation Ltd. Spectacle Infotek Ltd. Spectrum Foods Ltd. KHAWEA SPEFOO

Specular Marketing & Finance Ltd. SREI Infrastructure Finance Ltd. SREIIN Sri Arumuga Enterprise Ltd. SRS Real Infrastructure Ltd. NEWH SRSREA

SPEMAR

Stampede Capital Ltd. BRILSE Standard Capital Markets Ltd. STACAP STAMAF

Stanrose Mafatlal Investments & Finance Ltd. Starcom Information Technology Ltd. Step Two Corporation Ltd JATFIN

STETWO STEGUA

Sterling Guaranty & Finance Ltd. Subhkam Capital Ltd. SUBHCA

Subway Finance & Investment Co. Ltd. SUBWFI Suchak Trading Ltd. SUCTRA SUGA SULENG

Sugal & Damani Share Brokers Ltd. Sulabh Engineers & Services Ltd. Sumedha Fiscal Services Ltd. SUMFIS

Sumeru Industries Ltd. SUMEIN Summit Securities Ltd. RPGITO Summit Securities Ltd.(Old) [Amalgamated] Sun Techno Overseas Ltd. Sunbright Stock Broking Ltd. WELOVE BUBSTO KECINF

Sundaram Finance Ltd. SUNDAF Sungold Capital Ltd SUNCAP

Sunrise Industrial Traders Ltd. SUNRIN Sunteck Wealthmax Investments Ltd. Supreme Holdings & Hospitality Ltd. Surabhi Chemical & Investments Ltd. Suraj Holdings Ltd. SURHOL LALINV SUPHOL SURCHE

Suryakrupa Finance Ltd. SURYAF

Suryanagri Finlease Ltd. SURFIL Suryodaya Investment & Trading Ltd. SVA India Ltd. SVAIND Swarna Securities Ltd. SWASEC Swasti Vinayaka Art & Heritage Corporation Ltd. FLASYN Swastik Safe Deposit & Investments Ltd. SWASAF Swastika Investmart Ltd. Systel Infotech Ltd. SYSINF SYSCOR SWASIN SURYOI

Systematix Corporate Services Ltd. Systematix Securities Ltd. Tak Machinery & Leasing Ltd. Tamboli Capital Ltd. SYSSEC

TAKMAC

TAMCAP TARRCI TATINV

Tarrif Cine & Finance Ltd.

Tata Investment Corporation Ltd. TCFC Finance Ltd. TCI Finance Ltd. TCIFIN Times Guaranty Ltd. Tinna Finex Ltd. TINFIN Titan Securities Ltd. TITSEC TITTRA TIMGUA TCFFIN

Titan Trading & Agencies Ltd. Tokyo Finance Ltd. TOKFIN

Transpek Finance Ltd. TRANSF Transwarranty Finance Ltd. TRC Financial Services Ltd. Trinity Bio-Tech Ltd. TRIBIO TRAFIL TRCFIN

Trishakti Electronics & Industries Ltd.

TRIELE

Triumph International Finance India Ltd. TRIINT TSL Industries Ltd. TRASEC TVSFIN

TVS Finance and Services Ltd.

Twentyfirst Century Management Services Ltd. TWECEN Two-up Financial Services Ltd. GOMFIN Unijolly Investments Co Ltd. United Credit Ltd. UNICRL UNIINV

Uniworth Securities Ltd. UNISEC Unno Industries Ltd. Upasana Finance Ltd. UNNIND UPAFIN UPSINV

Upsurge Investment & Finance Ltd. Urja Global Ltd. COMCAP Ushakiran Finance Ltd. USHFIN V B Desai Financial Services Ltd. VBDESF

Vantage Corporate Services Ltd. VANCOR Vardhman Holdings Ltd. VARHOL Varun Mercantile Ltd. VARMER Vatsa Corporation Ltd. VATCOR VCK Capital Market Services Ltd. Vertex Securities Ltd. VERSEC VIJGRO VCKCAP

Vijay Growth Financial Services Ltd. Vikalp Securities Ltd. VIKSEC

Vinaditya Trading Company Ltd. VINTRA Vintage Securities Ltd. VINSEC

Visagar Financial Services Ltd. Visagar Polytex Ltd. VISPOL

INCFIN

Visisth Mercantile Ltd. VISMER VLS Finance Ltd. VLSFIN

Vora Construction Ltd. VORCON Walchand Peoplefirst Ltd. Wall Street Finance Ltd. WALLST Wallfort Financial Services Ltd. WALFIN Warner Multimedia Ltd. WARMUL Weizmann Forex Ltd. Wellness Noni Ltd. WEIZFO RGNSEC WELINV WALPEO

Welspun Investments & Commercials Ltd. Westlife Development Ltd. DHANIN WILFIN

Williamson Financial Services Ltd. Williamson Magor & Company Ltd.

WILMAG

Winro Commercial (India) Ltd. WINCOM Woodsvilla Ltd. COSPLU WW Technology Holdings Ltd. WWTECH Yamini Investments Ltd. YAMINV Yash Management & Satellite Ltd. Yash Trading & Finance Ltd. Yatish Securities Ltd. YATSEC YASTRA YASMAN

Yogi Infra Projects Ltd. YOGSUN Yule Financing & Leasing Company Ltd. YULFIN Zenith Capitals Ltd. SVLCAP

Zenzy Technocrats Ltd. BOMPOL Zodiac Ventures Ltd. GROINV

Zuari Forex Ltd. ZUAFOR

Competition Name Turnover Indiabulls Last Price Net Profit Total Assets 217.80 6,795.12 Market Cap.(Rs. cr.) Sales

2,929.26

723.79

17,797.15

Edelweiss Cap 31.55 2,391.24 India Infoline 46.85 1,354.35

206.95 68.64 4,919.13 603.23 63.30 1,554.51 46.43 56.30 512.58 1.17 -0.71 660.09

Motilal Oswal F 93.00 1,349.64 Delta Corp Pilani Invest 58.25 1,304.32 1,450.10

1,146.85

47.49 42.76 651.91

Future Capital 148.70 963.55 238.54 55.26 3,303.65 Network 18 29.90 427.21 80.52 -114.17 1,537.40

Kirloskar Broth 800.00 423.10 155.99 130.92 111.83 SKS Microfin Geojit BNP DB (Int) Stock 55.80 408.81 435.70 -1,360.60 16.80 383.64 201.01 39.72 356.50 94.45 330.58 12.07 2.40 25.67 4,016.87

Nalwa Sons Inv 615.05 315.90 18.66 15.64 295.64 The Byke Hosp 146.45 293.62 48.94 2.43 63.86

Money Matters 76.30 266.19 571.51 40.27 774.64 Consol Finvest 37.00 119.61 5.28 Aditya Birla Microsec Fin Emkay Global 3.63 342.95

12.50 69.25 67.41 -17.29 90.39 21.40 68.07 22.82 10.91 207.55 23.55 57.55 87.59 -0.77 140.46

Dhunseri Invest 62.10 36.36 9.00 Indbank Merchan Transwarranty 9.25 5.75

7.76

171.07 0.11 53.85 36.30 2.86 9.40 42.06 40.56

25.52 7.01

22.63 23.26 6.73 -0.57

Khandwala Se 18.50 22.09 3.36 Keynote Corp Se

26.60 18.67 8.53 0.20

Indo Thai Secu 10.00 10.00 4.41 Lakshmi Finance 28.00 0.00

What is Currency Derivatives? Currency derivatives is a contract between the seller and the buyer, whose value is to be derived from the underlying asset, the currency amount. A derivative based on currency exchange rates is a future contract which stipulates the rate at which a given currency can be exchanged for another currency as at a future date.

Using currency futures for hedging various kinds of FX exposures

Some of the common purposes/ transactions, in addition to import/export, which could use currency futures for the purpose of hedging, are as follows: Payment in foreign currency for travel abroad, for education, for medical treatment, payment for employees based abroad, etc. Payment of loan availed in foreign currency Investment in assets outside India or repatriation of capital invested outside India Payment of loan installments in INR by a person earning in foreign currency 39 We will explain few interesting examples from the above mentioned scenarios. Growth of nbfcs

NBFCs are in the news again. The industry is likely to witness the formation of a giant - by the merger of four leading NBFCs - the Mumbai-based Apple Finance Ltd, the Chennai-based Apple Credit Corporation, the Calcutta-based Srei International Finance and Alpic Finance. The new company will have an asset base of Rs.2200 crores, a network of 130 branches and a good reach of over one million investors across India. The decision was taken as a step to face the challenges and competition from banks and financial institutions, which the NBFC industry has been facing for the last few years. The step is also to overcome the stringent laws imposed on the industry after the CRB Scam.

Apple Finance has assets worth nearly Rs.800 crores and a strong presence in the West and North. The company is mainly active in the car and truck financing segment. On the other hand, Apple Credit Corporation is well established in the South with assets of nearly Rs.450 crores. In the Eastern market is Srei International (Rs. 500 crores asset-base), based in Calcutta. The company mainly services the infrastructure leasing and construction equipment leasing segment. And Alpic has assets worth almost Rs.500 crores and a good hold of the north and west markets. The company is into car financing and medical equipment leasing.

The most obvious advantage of the merger is the reduction in the costs of servicing and costs of funding. Moreover, even if the company reduces its margins, it will still be in a strong position. In towns where more than one of these four companies has an office, post-merger, only one office will suffice. This will enable considerable reduction in the cost of operations, which is expected to be around 75 percent. Presently, each of these companies is lending at least 4-5 points more than the PLR of banks. Once the alliance is formed, this spread over the PLR could be drastically reduced.

The combined entity will also be able to cater to many more areas of finance, considering the expertise each of these companies has in its area of operation. The new company will also be in a better position to bargain while attracting funds, both domestic and international, as well as in attracting investors. However, it may take months before the entire deal is finalized. Approval of the Reserve Bank of India is required. The companies also need to approach the high court and convene a meeting to get approval of shareholders and creditors.

While the alliance will do good to each of the companies, where will it leave the competitors is the question. Today, the NBFCs industry is dominated by Sundaram Finance, Tata Finance, Reliance Capital and Kotak Mahindra. Sundaram Finance is the largest Auto Finance company. In the fixed deposits segment, the company has the largest retail base of deposits. Sundaram has more than 6.64 lakh depositors with total deposits aggregating over Rs.700 crore.

Kotak Mahindra has an asset base of over Rs.1200 crores and is into trade finance, asset finance, collateral funding, structured finance and funds syndication. In the consumer services group, the company is into consumer finance, office equipment finance, fixed deposits and commercial vehicles finance. In the fixed deposits business, the company has a retail deposit base of more than Rs.190 crores spread over 1,32,000 investors. In the commercial vehicle finance business, Kotak has over 4000 customers.

The new company will definitely be the largest in terms of size. One major threat to the leaders today. Secondly, the strength of the company will put it in a position to provide better services to a set of customers, the size of which probably no individual company can have. And thirdly, the merged company may be able afford lesser margins on its products, the biggest blow it could give to the existing companies.

Definitely the leaders today need to gear up and make themselves strong enough to face the challenge before the merger actually happens. The goodwill with their customers could probably be their biggest asset. More importantly this could become the trend of the future where the NBFC industry will increasingly look towards consolidation to survive and thrive in this dog-eat-dog world of finance.

Dollar to Rupee Exchange Rate Chart

3000000 2531462 2500000 2185809 2000000 1572780 1500000 1000000 500000 169449 0 Category 1 Category 2 qwe

330601

Contracts (Rs Cr) Open Interest Qty Price

Best Bid

Best Ask

LTP

Value

Price

Qty 43 56.8900 56.8925 66 56.8925 2871.22

USDINR 27JUN2012 760765 USDINR 27JUL2012 EURINR 27JUN2012 USDINR 29AUG2012

340 15 3

57.1600 71.2350 57.4150

57.1700 71.2400 57.4275

1 4 25

57.1600 71.2350 57.4150

454.80 399601 78.88 34943 36.97 130679

GBPINR 27JUN2012 JPYINR 27JUN2012 USDINR 26SEP2012 GBPINR 27JUL2012 EURINR 27JUL2012 USDINR 29OCT2012

5 1 203 1 2 3

88.6000 70.6425 57.6550 88.8150 71.4775 57.8950

88.6200 70.6550 57.6925 88.8500 71.5025 57.9500

2 45 42 1 1 5

88.6200 70.6500 57.6700 88.8850 71.4450 57.9050

25.90 21497 25.45 13843 23.97 64906 4.04 1.40 0.92 6677 7746 37704

EURINR 27JUN2012 EURINR 27JUL2012 GBPINR GBPINR 27JUN2012 GBPINR 27JUL2012 JPYINR JPYINR 27JUN2012 JPYINR 27JUL2012

25 1

71.2700 71.5500

71.2850 71.5775

1 3

71.2700 71.5500

81.15 35027 5.90 7841

10 4

88.6100 88.8300

88.6200 88.8650

4 3

88.6100 88.8025

29.91 21416 4.29 6699

7 8

70.6600 70.8925

70.6700 70.9600

20 1

70.6600 70.9200

27.74 13658 0.10 2614

Currency USD USD USD

Last_Updated Last_Traded 56.3055 56.1555 55.95358

6/21/2012 6/20/2012 6/19/2012

USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD

6/18/2012 6/17/2012 6/16/2012 6/15/2012 6/14/2012 6/13/2012 6/12/2012 6/11/2012 6/10/2012 6/9/2012 6/8/2012 6/7/2012 6/6/2012 6/5/2012 6/4/2012 6/3/2012 6/2/2012 6/1/2012 5/31/2012 5/30/2012 5/29/2012 5/28/2012 5/27/2012 5/26/2012 5/25/2012

55.9105 54.9514 55.31103 55.39577 55.8055 55.68774 55.80505 55.7455 54.84882 55.42575 55.41533 54.94295 55.3655 55.6455 55.6555 55.52054 55.51751 55.54733 56.0855 56.2355 55.67505 55.37515 55.13803 55.37208 55.3754

USD USD

5/24/2012 5/23/2012

55.65509 56.00024

http://www.stockfry.com/Forex_Watch_Hist.asp?a=USD&MonthYear=May-2012

Historical Price for American Dollar Vs Indian Rs.

The table below displays historical exchange rates between the Indian Rupee (INR) and the American Dollar (USD) or Indian Rupees vs American Dollar or INRUSD or American Dollar vs Indian Rs or INR vs USD.To chose information for particular month, Select Month name from given list. Currency Code Date USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD 5/31/2012 5/30/2012 5/29/2012 5/28/2012 5/27/2012 5/26/2012 5/25/2012 5/24/2012 5/23/2012 5/22/2012 5/21/2012 5/20/2012 5/19/2012 5/18/2012 5/17/2012 5/16/2012 5/15/2012 5/14/2012 5/13/2012 5/12/2012 Currency Price 56.0855 56.2355 55.67505 55.37515 55.13803 55.37208 55.3754 55.65509 56.00024 55.38929 55.03449 54.45233 54.43184 54.41862 54.46575 54.49477 53.79692 53.96507 53.75913 53.59807

USD USD USD USD USD USD USD USD USD USD USD

5/11/2012 5/10/2012 5/9/2012 5/8/2012 5/7/2012 5/6/2012 5/5/2012 5/4/2012 5/3/2012 5/2/2012 5/1/2012

53.64611 53.26307 53.83161 53.126 52.9105 53.7316 53.76855 53.47562 53.41341 52.96085 52.51737

Historical Price for British Pound Vs Indian Rs.

The table below displays historical exchange rates between the Indian Rupee (INR) and the British Pound (GBP) or Indian Rupees vs British Pound or INRGBP or British Pound vs Indian Rs or INR vs GBP.To chose information for particular month, Select Month name from given list. Currency Code Date GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP 5/31/2012 5/30/2012 5/29/2012 5/28/2012 5/27/2012 5/26/2012 5/25/2012 5/24/2012 5/23/2012 5/22/2012 5/21/2012 5/20/2012 5/19/2012 5/18/2012 5/17/2012 5/16/2012 5/15/2012 5/14/2012 5/13/2012 5/12/2012 Currency Price 86.332 87.07204 87.0322 86.80843 86.45003 86.73027 86.75278 87.21 87.87869 87.3135 87.07009 86.10321 86.09556 86.10021 85.9885 86.716 86.0615 86.88465 86.35579 86.16975

GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP

5/11/2012 5/10/2012 5/9/2012 5/8/2012 5/7/2012 5/6/2012 5/5/2012 5/4/2012 5/3/2012 5/2/2012 5/1/2012

86.20177 85.92422 86.83536 85.8135 85.6898 86.77182 86.65511 86.35578 86.31 85.80009 85.17888

he table below displays historical exchange rates between the Indian Rupee (INR) and the British Pound (GBP) or Indian Rupees vs British Pound or INRGBP or British Pound vs Indian Rs or INR vs GBP.To chose information for particular month, Select Month name from given list. Currency Code Date GBP GBP GBP GBP GBP GBP GBP GBP 6/21/2012 6/20/2012 6/19/2012 6/18/2012 6/17/2012 6/16/2012 6/15/2012 6/14/2012 Currency Price 87.81719 88.2115 87.881 87.60403 86.44888 86.28128 87.0322 86.7965

GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP

6/13/2012 6/12/2012 6/11/2012 6/10/2012 6/9/2012 6/8/2012 6/7/2012 6/6/2012 6/5/2012 6/4/2012 6/3/2012 6/2/2012 6/1/2012

86.1915 86.8865 86.2435 85.12638 85.47008 85.7175 85.3586 85.7615 85.5685 85.6185 85.35974 85.36065 85.286

istorical Price for Euro Vs Indian Rs.

The table below displays historical exchange rates between the Indian Rupee (INR) and the Euro (EUR) or Indian Rupees vs Euro or INREUR or Euro vs Indian Rs or INR vs EUR.To chose information for particular month, Select Month name from given list. Currency Code Date EUR EUR EUR 6/21/2012 6/20/2012 6/19/2012 Currency Price 70.65125 71.30507 70.90609

EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR

6/18/2012 6/17/2012 6/16/2012 6/15/2012 6/14/2012 6/13/2012 6/12/2012 6/11/2012 6/10/2012 6/9/2012 6/8/2012 6/7/2012 6/6/2012 6/5/2012 6/4/2012 6/3/2012 6/2/2012 6/1/2012

70.31349 69.85382 70.00405 70.02574 70.47458 69.83027 69.787 69.489 69.89853 69.0785 69.35073 69.0565 69.63705 69.289 69.54069 69.04086 69.00162 69.03233

Historical Price for Euro Vs Indian Rs.

The table below displays historical exchange rates between the Indian Rupee (INR) and the Euro (EUR) or Indian Rupees vs Euro or INREUR or Euro vs Indian Rs or INR vs EUR.To chose information for particular month, Select Month name from given list.

Currency Code Date EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR 5/31/2012 5/30/2012 5/29/2012 5/28/2012 5/27/2012 5/26/2012 5/25/2012 5/24/2012 5/23/2012 5/22/2012 5/21/2012 5/20/2012 5/19/2012 5/18/2012 5/17/2012 5/16/2012 5/15/2012 5/14/2012 5/13/2012 5/12/2012 5/11/2012 5/10/2012 5/9/2012 5/8/2012

Currency Price 69.27064 69.55105 69.51921 69.35408 69.54339 69.35204 69.30771 69.77637 70.48731 70.23287 70.49217 69.58099 69.58099 69.54042 69.08371 69.301 68.505 69.2164 69.1028 69.25158 69.28781 68.86929 69.62115 69.063

EUR EUR EUR EUR EUR EUR EUR

5/7/2012 5/6/2012 5/5/2012 5/4/2012 5/3/2012 5/2/2012 5/1/2012

69.09289 69.68783 70.09538 69.91095 70.15647 69.67269 69.61356

Dollar Rupee $1 $5 $ 10 $ 50 $ 100 $ 250 $ 500 56.42 282 564 2821 5642 14106 28212

$ 1000 56425 $ 3000 169275 $ 5000 282125 $ 10000 564250 56.425 per Dollar 21 June, 2012

urrency Pair Analysis & News Written by Aboutcurrency EUR/USD News and Analysis USD/JPY News and Analysis AUD/USD News and Analysis NZD/USD News and Analysis EUR/JPY News and Analysis EUR/AUD News and Analysis AUD/JPY News and Analysis EUR/CHF News and Analysis GBP/USD News and Analysis USD/CHF News and Analysis USD/CAD News and Analysis GBP/JPY News and Analysis EUR/GBP News and Analysis EUR/CAD News and Analysis CHF/JPY News and Analysis GBP/CHF News and Analysis

Short-Term Interest Rates Country Argentina Australia Brazil Canada Chile Term Name Baibar IBOR 15d Cash Rate Target Selic Rate Target Key Interest Rate Currency ARS AUD BRL CAD 5.25% Current 9.17% 3.75% 10.25% 1.00% Changed 07/30/2010 05/02/2012 01/19/2012 09/08/2010 06/14/2011

4Nominal Overnight Rate Target CLP

China Lending Rate Colombia Repo/Reverse Repo Rates CZK

CNY 6.31% 06/07/2012 COP 4.75% 11/25/2011

Czech Republic Bank Rate Denmark

0.75% 04/30/2010 0.25% 06/01/2012

Discount Rate DKK

European Union

Main Refinancing Rate EUR

1.00% 12/14/2011

http://www.exchangerate.com/currency-charts/USD/INR/last-30-days

Hong Kong Hungary

Base Rate Base Rate

HKD HUF

0.50% 12/12/2008 7.00% 12/21/2011 ISK 4.75% 11/02/2011

Iceland Sedlabanki Interest Rate India Repo Rate INR

8.00% 05/15/2012 6.00% 11/10/2011

Indonesia Israel

Reference Rate IDR ILS

Base Rate

2.50% 01/23/2012 JPY 0.10% 12/19/2008

Japan Uncollateralized Overnight Call Rate Korea, Republic of Base Rate LVL KRW

3.25% 06/10/2011

Latvia Refinancing Rate Lithuania Malaysia

3.50% 03/19/2010 LTL 1.75% 05/08/2009

Overnight Repo Rate Overnight Rate MYR

3.00% 05/05/2011

Mexico Overnight Rate MXN New Zealand

4.50% 07/10/2009 NZD 2.50% 10/03/2011

Official Cash Rate

Norway Key Policy Rate NOK Peru Reference Rate PEN Repo Rate

1.50% 03/14/2012 4.25% 05/13/2011 PHP 4.25% 01/19/2012

Philippines

Poland Reference Rate PLN Russian Federation Singapore South Africa

4.50% 06/09/2011 8.00% 12/26/2011 SGD 0.05% 08/20/2010

Refinance Rate RUB

Domestic IBOR Overnight Repo Rate SEK ZAR

5.50% 11/18/2010

Sweden Repo Rate

1.50% 02/22/2012

Switzerland

Repo Overnight Rate TWD

CHF

0.00% 08/05/2011

Taiwan Daily Discount Rate Thailand

1.875% 06/30/2011 THB 3.25% 11/30/2011

Repo Bilateral Overnight

Turkey IBOR Overnight TRY United Kingdom United States

5.75% 08/04/2011 GBP USD 0.50% 03/05/2009 0.25% 12/16/2008 16.32% 08/13/2010

Official Bank Rate

Federal Funds Target Rate

Venezuela, Bolivarian Republic of

Borrowing Rate VEF

CHAPTER 1INTRODUCTION TO FOREX AND FOREXDERIVATIVES The foreign exchange (currency or forex or FX) market exists wherever onecurrency is traded for another. It is the largest and most liquid financialmarket in the world. Exchanging currencies can take two basic forms: anoutright or a swap. When two parties exchange one currency for another thetransaction is called an outright. When two parties agree to exchange and re-exchange (in future) one currency for another, it is called a swap. BASIC FOREIGN EXCHANGE DEFINITIONS Spot: Foreign exchange spot trading is buying one currency with a differentcurrency for immediate delivery. The standard settlement convention forForeign Exchange Spot trades is T+2 days, i.e., two business days from thedate of trade execution. An exception is the USD/CAD (US Canadian Dollars)currency pair which settles T+1. Rates for days other than spot are alwayscalculated with reference to spot rate.

Forward Outright: A foreign exchange forward is a contract between twocounterparties to exchange one currency for another on any date after spot.In this transaction, money does not actually change hands until some agreedupon future date. The duration of the trade can be a few days, months oryears. For most major currencies, three business days or more after deal datewould constitute a forward transactionhttp://htmlimg2.scribdassets.com/739iko8ow0v780e/images/3-9231651ba0.jpg

ase Currency / Terms Currency: In foreign exchange markets, the basecurrency is the first currency in a currency pair. The second currency is calledas the terms currency. Exchange rates are quoted in per unit of the basecurrency. E.g. the expression Dollar Rupee, tells you that the Dollar is beingquoted in terms of the Rupee. The Dollar is the base currency and the Rupeeis the terms currency.Exchange rates are constantly changing, which means that the value of onecurrency in terms of the other is constantly in flux. Changes in rates areexpressed as strengthening or weakening of one currency vis--vis the secondcurrency. Changes are also expressed as appreciation or depreciation of onecurrency in terms of the second currency. Whenever the base currency buysmore of the terms currency, the base currency has strengthened /

appreciatedand the terms currency has weakened / depreciated. E.g. If Dollar Rupeemoved from 43.00 to 43.25. The Dollar has appreciated and the Rupee hasdepreciated. Swaps: A foreign exchange swap is a simultaneous purchase and sale, or viceversa, of identical amounts of one currency for another with two differentvalue dates.The two currencies are initially exchanged at the Spot Rate and are exchangedback in the future at the Forward Rate. The Forward Rate is derived byadjusting the Spot rate for the interest rate differential of the two currenciesfor the period between the Spot and the Forward date. Liquidity in onecurrency is converted into another currency for a period of time. FX Swaps arecommonly used as a way to facilitate funding in the cases where funds areavailable in a different currency than the one needed. Effectively, each partyis given the use of an amount of foreign currency for a specific time.The emergence of the market for derivative products, most notably forwards,futures and options, can be traced back to the willingness of risk-averseeconomic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets aremarked by a very high degree of volatility. Through the use of derivativeproducts, it is possible to partially or fully transfer price risks by locking-inasset prices. As instruments of risk management, these generally do notinfluence the fluctuations in the underlying asset prices. However, by locking-in asset prices, derivative products minimize the impact of fluctuations inasset prices on the profitability and cash flow situation of risk-averse

9 In a nut shell, derivatives markets help increase savings and investment inthe long run. Transfer of risk enables market participants to expand theirvolume of activity. 1.7 EXCHANGE-TRADED VS. OTC DERIVATIVESMARKETS Derivatives have probably been around for as long as people have been trading withone another. Forward contracting dates back at least to the 12th century, andmay well have been around before then. Merchants entered into contracts withone another for future delivery of specified amount of commodities at specifiedprice. A primary motivation for pre-arranging a buyer or seller for a stock of commodities in early forward contracts was to lessen the possibility that largeswings would inhibit marketing the commodity after a harvest.As the name suggests, derivatives that trade on an exchange are called exchangetraded derivatives, whereas privately negotiated derivative contracts are called OTCcontracts.The OTC derivatives markets have witnessed rather sharp growth over thelast few years, which has accompanied the modernization of commercial andinvestment banking and globalisation of financial activities. The recentdevelopments in information technology have contributed to a great extent tothese developments. While both exchange-traded and OTC derivative contractsoffer many benefits, the former have rigid structures compared to the latter.The OTC derivatives markets have the following features compared to exchange-traded derivatives: 1.

The management of counter-party (credit) risk is decentralized andlocated within individual institutions, 2.

There are no formal centralized limits on individual positions, leverage,or margining, 3.

There are no formal rules for risk and burden-sharing, 4.

There are no formal rules or mechanisms for ensuring market stabilityand integrity, and for safeguarding the collective interests of marketparticipants, and 5.

The OTC contracts are generally not regulated by a regulatory authorityand the exchange's selfregulatory organization, although they areaffected indirectly by national legal systems, banking supervision andmarket surveillance.

INTRODUCTION TO CURRENCYFUTURES 2.1 DEFINITION OF CURRENCY FUTURES A futures contract is a standardized contract, traded on an exchange, to buyor sell a certain underlying asset or an instrument at a certain date in thefuture, at a specified price. When the underlying asset is a commodity, e.g.Oil or Wheat, the contract is termed a commodity futures contract. Whenthe underlying is an exchange rate, the contract is termed a currency futurescontract. In other words, it is a contract to exchange one currency foranother currency at a specified date and a specified rate in the future.Therefore, the buyer and the seller lock themselves into an exchange rate fora specific value or delivery date. Both parties of the futures contract mustfulfill their obligations on the settlement date.Currency futures can be cash settled or settled by delivering the respectiveobligation of the seller and buyer. All settlements however, unlike in the caseof OTC markets, go through the exchange.Currency futures are a linear product, and calculating profits or losses onCurrency Futures will be similar to calculating profits or losses on Indexfutures. In determining profits and losses in futures trading, it is essential toknow both the contract size (the number of currency units being traded) andalso what is the tick value. A tick is the minimum trading increment or pricedifferential at which traders are able to enter bids and offers. Tick valuesdiffer for different currency pairs and different underlyings. For e.g. in thecase of the USD-INR currency futures contract the tick size shall be 0.25paise or 0.0025 Rupees. To demonstrate how a move of one tick affects theprice, imagine a trader buys a contract (USD 1000 being the value of eachcontract) at Rs.42.2500. One tick move on this contract will translate toRs.42.2475 or Rs.42.2525 depending on the direction of market movement.Purchase price: Rs.42.2500Price increases by one tick: +Rs.00.0025New price: Rs.42.2525Purchase price: Rs.42.2500Price decreases by one tick: Rs.00.0025New price: Rs.42.2475

13 The value of one tick on each contract is Rupees 2.50. So if a trader buys 5contracts and the price moves up by 4 tick, she makes Rupees 50.Step 1: 42.2600 42.2500Step 2: 4 ticks * 5 contracts = 20 pointsStep 3: 20 points * Rupees 2.5 per tick = Rupees 50(note: please note the above examples do not include transaction fees andany other fees, which are essential for calculating final profit and loss

2.4 DISTINCTION BETWEEN FUTURES ANDFORWARDS CONTRACTS Forward contracts are often confused with futures contracts. The confusion isprimarily because both serve essentially the same economic functions of allocating risk in the presence of future price uncertainty. However futureshave some distinct advantages over forward contracts as they eliminatecounterparty risk and offer more liquidity and price transparency. However, itshould be noted that forwards enjoy the benefit of being customized to meetspecific client requirements. The advantages and limitations of futurescontracts are as follows; Advantages of Futures: -

Transparency and efficient price discovery. The market brings togetherdivergent categories of buyers and sellers. -

Elimination of Counterparty credit risk. -

Access to all types of market participants. (Currently, in the Forex OTCmarkets one side of the transaction has to compulsorily be anAuthorized Dealer). -

Standardized products. -

Transparent trading platform. Limitations of Futures: -

The benefit of standardization which often leads to improving liquidityin futures, works against this product when a client needs to hedge aspecific amount to a date for which there is no standard contract -

While margining and daily settlement is a prudent risk managementpolicy, some clients may prefer to not incur this cost in favor of OTCforwards, where collateral is usually not demanded 2.5 INTEREST RATE PARITY PRINCIPLE For currencies which are fully convertible, the rate of exchange for any dateother than spot, is a function of spot and the relative interest rates in eachcurrency. The assumption is that, any funds held will be invested in a timedeposit of that currency. Hence, the forward rate is the rate which neutralizesthe effect of differences in the interest rates in both the currencies.The forward rate is a function of the spot rate and the interest rate differentialbetween the two currencies, adjusted for time. In the case of fully convertiblecurrencies, having no restrictions on borrowing or lending of either currencythe forward rate can be calculated as follows;

18 Forward Rate = Spot +/- Points

Points =Spot1 + terms i * daysbasis _ 11 + base i *daysbasis where i = rate of interestIn the context of currencies, like USDINR which are not fully convertible,forwards and futures prices can be influenced by the regulation that is in placeat any given point in time. Solved Problems Q:

When an underlying is an exchange rate, the contract is termed as a ______________.1. Currency Futures contract 3. Commodity Futurescontract2. Risks 4. None of the above A: The Correct Answer is 1. Q:

A tick is the _____________ at which traders are able to enter bidsand offers.1. maximum trading increment 3. price2. minimum trading increment 4. None of the above A:

The Correct Answer is 2. Q:

Futures markets are designed to solve the problems that exist in the ____________.1. spot markets 3. forward markets2. options markets 4. None of the above A:

The Correct Answer is 3.

19 Q:

CME FX Futures are traded by _________________.1. commercial banks 3. investment banks2. hedge funds 4. All of the above A:

The Correct Answer is 4.

TRADING UNDERLYING VERSUS TRADINGFUTURES The USD-INR market in India is big. Significant volumes get traded on a dailybasis. However there are certain restrictions on participation in the underlyingOTC market. Access to the USD-INR market is restricted to specified entities like

22 banks, who are registered as Authorised Dealers and to other entities to have averifiable underlying commercial exposure. The primary reason for grantingaccess to the FX markets is the need to hedge FX risks. This restriction is notapplicable to the futures market.Consider an importer of machinery from an international country where this importis going to be denominated in dollars. The importer enters into a contract in thisregard with the exporter on say, September 01. According to the terms of thecontract an amount of USD 1 million is to be paid on November 30. Betweenthese days, the price of USD against INR is bound to fluctuate. The fluctuationscan be such that the price of USD goes up (Rupee depreciates) or the price of USDcomes down (Rupee appreciates). What if rupee depreciates? This would affectthe cost of the machinery, project cost, profitability of the deal and the profitabilityof the company as a whole.Let us assume that the Dollar appreciated (Rupee depreciated) during this timefrom Rs.44.12 to Rs.45.94. The loss on this count would have been Rs.18.20lakhs. To protect itself the company could do many things. Presumably they couldbuy dollars on September 01 itself. The cost of USD 1 million works out to Rs.4.41crores. But this would have tied up a huge amount of the working capital of thecompany. The cost of funds would have been a financial drain. The company canalso book a forward contract. That would depend on its existing bankingrelationship and limits in this regard.Instead, internationally many such companies prefer to hedge themselves againstforeign exchange fluctuations using exchange traded currency futures contracts.Buying futures to hedge oneself against the payment currency depreciating is

atypical strategy employed globally.In this example, let us presume that the Indian importer chose to protect itself bybuying futures. The company needed to buy 1000 contracts as one contract is of USD 1000. 1000 contracts amount to USD 1 million which is the same as thepayment needed to be made by the importing company and therefore wouldtotally offset the currency risk associated with the deal. For this purpose, only avery small portion of the total value needs to be put up as margin by the importingcompany. Typically it may be around say 5%.Because of the increase in the cost of USD against INR during this period, for thepayment on USD 1 million, the company had to pay Rs.4.594 crores as againstRs.4.412 crores. However this increase in cost was offset by the profit realized bybeing long in the futures contract. By hedging with the futures contracts thecompany hedged its exposures using currency futures.While this company bought the currency futures as it had to pay dollars, someother company which may be receiving dollars in India and who hedged usingselling futures or an investor with a directional view or a banker who was doingarbitrage would have provided the other side of the trade.To trade the underlying or its forward, the customer must have a relationship witha banker who is ready to trade for him, exposure to dollar, and the associated

23 documentation. In this case, it may be noted that the banker may be required totake a credit exposure on the customer.To trade currency futures, a customer must open a futures trading account withany of the registered members of the recognized exchanges. Buying or sellingfutures simply involves putting in the margin money. This enables the futurestraders to take a position in the underlying currency without having an underlyingexposure.A futures contract represents a promise to transact at some point in thefuture. In this light, a promise to sell currency is just as easy to make as apromise to buy currency. Selling currency futures without previously owningthe currency simply obligates the trader to selling a certain amount of theunderlying at some point in the future. It can be done just as easily as buyingfutures, which obligates the trader to buying a certain amount of the underlying atsome point in the future. However since currency futures are settled in cash, thebuying and selling does not therefore directly involve delivery of the underlyingcurrency and thus the buying or selling of the actual currency.

FUTURES PAYOFFS A payoff is the likely profit/loss that would accrue to a market participant withchange in the price of the underlying asset. This is generally depicted in theform of payoff diagrams which show the price of the underlying asset on theX-axis and the profits/losses on the Y-axis.Futures contracts have linear payoffs. In simple words, it means that thelosses as well as profits for the buyer and the seller of a futures contract areunlimited. Options do not have linear payoffs. Their pay offs are non-linear.These linear payoffs are fascinating as they can be combined with options andthe underlying to generate various complex payoffs. However, currently onlypayoffs of futures are discussed as exchange traded foreign currency optionsare not permitted in India. Payoff for buyer of futures: Long futures

The payoff for a person who buys a futures contract is similar to the payoff fora person who holds an asset. He has a potentially unlimited upside as well asa potentially unlimited downside. Take the case of a speculator who buys atwo-month currency futures contract when the USD stands at say Rs.43.19.The underlying asset in this case is the currency, USD. When the value of dollar moves up, i.e. when Rupee depreciates, the long futures position startsmaking profits, and when the dollar depreciates, i.e. when rupee appreciates,it starts making losses. Figure 4.1 shows the payoff diagram for the buyer of a futures contract.

24 Figure Payoff for a buyer of currency futuresThe figure shows the profits/losses for a long futures position. The investorbought futures when the USD was at Rs.43.19. If the price goes up, hisfutures position starts making profit. If the price falls, his futures positionstarts showing losses.

0LossProfit43.19

Payoff for seller of futures: Short futures

The payoff for a person who sells a futures contract is similar to the payoff fora person who shorts an asset. He has a potentially unlimited upside as well as apotentially unlimited downside. Take the case of a speculator who sells a two-month currency futures contract when the USD stands at say Rs.43.19.The underlying asset in this case is the currency, USD. When the value of dollarmoves down, i.e. when rupee appreciates, the short futures position starts

10 Some of the features of OTC derivatives markets embody risks to financial marketstability. The following features of OTC derivatives markets can give rise toinstability in institutions, markets, and the international financial system: (i) thedynamic nature of gross credit exposures; (ii) information asymmetries; (iii) theeffects of OTC derivative activities on available aggregate credit; (iv) the highconcentration of OTC derivative activities in major institutions; and (v) the centralrole of OTC derivatives markets in the global financial system. Instability ariseswhen shocks, such as counter-party credit events and sharp movements in assetprices that underlie derivative contracts occur, which significantly alter theperceptions of current and potential future credit exposures. When asset priceschange rapidly, the size and configuration of counter-party exposures can becomeunsustainably large and provoke a rapid unwinding of positions.There has been some progress in addressing these risks and perceptions.However, the progress has been limited in implementing reforms in riskmanagement, including counter-party, liquidity and operational risks, andOTC derivatives markets continue to pose a threat to international financialstability. The problem is more acute as heavy reliance on OTC derivativescreates the possibility of systemic financial events, which fall outside themore formal clearing house structures. Moreover, those who provide OTCderivative products, hedge their risks through the use of exchange tradedderivatives. Solved Problems Q: The largest and the most liquid financial market in the world is the ___________.

1. Equity market 3. Foreign Exchange market2. Bond market 4. None of the above A:

The Correct Answer is 3. Q:

The standard settlement convention for Foreign Exchange Spot is _________.1. T+1 days 3. T+3 days2. T+2 days 4. None of the above A:

The Correct Answer is 2.

11 Q:

Whenever the base currency buys more of the terms currency, thebase currency has __________.1. Appreciated 3. Weakened2. Become volatile 4. None of the above A:

The Correct Answer is 1. Q:

Derivatives essentially helps transfer of _______.1. Funds 3. Goods2. Risks 4. None of the above A:

The Correct Answer is 2.

making profits, and when the dollar appreciates, i.e. when rupee depreciates,it starts making losses. The Figure below shows the payoff diagram for the sellerof a futures contract. Figure Payoff for a seller of currency futuresThe figure shows the profits/losses for a short futures position. The investor soldfutures when the USD was at 43.19. If the price goes down, his futures positionstarts making profit. If the price rises, his futures position starts showing losses

PRICING FUTURES COST OF CARRY MODEL Pricing of futures contract is very simple. Using the cost-of-carry logic, wecalculate the fair value of a futures contract. Everytime the observed pricedeviates from the fair value, arbitragers would enter into trades to capture thearbitrage profit. This in turn would push the futures price back to its fair value.The cost of carry model used for pricing futures is given below:

26 where:r Cost of financing (using continuously compounded interest rate)T Time till expiration in yearse 2.71828 Example: Security XYZ Ltd trades in the spot market at Rs. 1150. Money can beinvested at 11% p.a. The fair value of a one-month futures contract on XYZ Ltd. iscalculated as follows:We will use the same model for pricing currency futures. However, beforethat we will see how index and stock futures are priced.A futures contract on the stock market index gives its owner the right andobligation to buy or sell the portfolio of stocks characterized by the index.Stock index futures are cash settled; there is no delivery of the underlyingstocks.In their short history of trading, index futures have had a great impact on theworld's securities markets. Its existence has revolutionized the art andscience of institutional equity portfolio management.The main differences between commodity and equity index futures are that:

There are no costs of storage involved in holding equity.

Equity comes with a dividend stream, which is a negative cost if you arelong the stock and a positive cost if you are short the stock.Therefore, Cost of carry = Financing cost - Dividends. Thus, a crucial aspectof dealing with equity futures as opposed to commodity futures is an accurateforecasting of dividends. The better the forecast of dividend offered by asecurity, the better is the estimate of the futures price. Pricing index futures given expected dividend yield If the dividend flow throughout the year is generally uniform, i.e. if there arefew historical cases of clustering of dividends in any particular month, it is

27 useful to calculate the annual dividend yield. (r-q)T F= Se where:F futures priceS spot index valuer cost of financingq expected dividend yieldT holding period Example A two-month futures contract trades on the NSE. The cost of financing is 10%and the dividend yield on Nifty is 2% annualized. The spot value of Nifty4000. What is the fair value of the futures contract? (0.1-0.02) (60 / 365) Fair value = 4000e = Rs.4052.95The cost-of-carry model explicitly defines the relationship between the futuresprice and the related spot price. As we know, the difference between the spotprice and the futures price is called the basis. Nuances

As the date of expiration comes near, the basis reduces - there is a convergence of the futures price towards the spot price. On the date of expiration, the basis is zero. If it is not, then there is an arbitrageopportunity. Arbitrage opportunities can also arise when the basis(difference between spot and futures price) or the spreads (differencebetween prices of two futures contracts) during the life of a contract areincorrect.

There is nothing but cost-of-carry related arbitrage that drives thebehavior of the futures price.

Transactions costs are very important in the business of arbitrage.

28 Variation of basis over timeThe figure shows how basis changes over time. As the time to expiration of acontract reduces, the basis reduces. Towards the close of trading on the day of settlement, the futures price and the spot price converge. The closing price for theJune 28 futures contract is the closing value of Nifty 50 on that day

The cost of carry model

This model assumes that arbitrage between the cash market and the futures market eliminates all imperfections in pricing, i.e., unaccounted for differences between the cash price and futures price. The difference that remains is due to a factor called the cost of carry. The model also assumes, for simplicity sake, that the contract is held till maturity, so that a fair price can be arrived at.

To put it briefly, once all distortions in the futures price have been erased by arbitrage, a fair futures price = the spot price + the net cost of carry of the asset from today to the date on which the contract expires.

The net cost of carry involves all costs that you may have had to incur in order to hold a similar position open in the cash market, less the returns that you would have received from this position. The costs typically include financing charges, at the prevailing rate of interest. This is because you may have borrowed to finance a similar position in the cash market, and if not, you may have lost interest on the capital that you invested to keep your position open. In contrast in the futures market, you merely have to deposit a fraction of the value of your position in the form of a margin. The returns that you receive could consist of dividends or bonuses that you may have received in case you had held stocks in the cash market. In the case of an index future, your returns may be gauged by the average return that an index delivers.

As this theory is modified to become more realistic, by discarding assumptions or including variables, it becomes more complex. However, what you must absorb from this theory is the fact that there are costs and benefits involved in keeping a position open in a cash market and the price of a futures contract charges you or compensates you to reflect these.