Exchange Traded Currency Futures in India

I am glad to see in Business Standard about the SEBI approval for Exchange Traded Currency Futures.

1. Presently USD-INR futures are being traded and a succesful instrument on various parameters. Dr Ajay Shah has an excellent piece on Currency futures and an early advocate and pioneer in this area.
2. Prof JR Verma blogs about OTC derivatives here. I have used and admired his book DERIVATIVES AND RISK MANAGEMENT at VJIM and students liked his treatment of the subject which is clarity , precision and brevity.
3. Previously I have read and enjoyed a book about the genesis of currency futures and the role of Leo Melamood in The Vandal's Crown.
4. Currency Futures gives a great platform for both hedgers and speculators and arbitragers in India. I particularly noticed in Hyderabad many dubious outfits as they lure customers into OTC international currency broker trading platforms with horrifying results.
5. I wonder how the owners of these shops are blissfully unaware of market design fundamentals? Atleast now they can engage in a settlement guranteed and scam free Speculation in Currency market.
6. I may ask my freind Pradeep to shift from OTC forex broker to NSE CD Segment .
7. My sense is that this will greatly surpass equities trading as youth are increasingly taking to currency trading. Currency pairs are also less subject to assymetric information as they are macro underlyings.
8. Will new pairs INR-JPY,INR-EUR,INR-GBP bring Volatility ? I think USD-INR annualized Vol is low at 8.77% compared to Nifty annualized Vol at 17.7%.

NCFM Exams in CM & DM

I have taken NCFM examination in Capital Market ( Dealers) Module and Derivatives Market ( dealers) Module.

1. I am satisfied with my scores 74% in CMDM, 95% in DMDM
2. My feeling is that DMDM question paper strength is decreased due to separation of Option Trading Strategies module.
3. CMDM level of difficulty and questioning increased.
4. The quality of new study material is high and the flow is very smooth.

Important Readings

Some of the must readings from the resources I follow

1. Brett on Trader Education, Training, Mentoring
2. Victor on Checklist for Traders
3. Nice Humour from Newton Linchen

Newton Linchen's Insightful Comments

I always look forward to my dear friend Newton Linchen's insightful comments, critique, advice and direction. As a Speclist author, Trader and a great teacher willing to share his ideas, he has been a source of inspiration even in difficult times. I take liberty to post his comments here.

I rejoice to know you are involved in such a high standard project.Most brokerage houses are just interested in commissions, whether or not the client learns something or is profitable.
To develop an environment in wich is possible for the customer to grow, both in wealth and knowledge, is indeed a noble way to do business.
May all the good influences come in your way, and may you, your partners and clientes prosper!Regards from Brazil,
Newton Paulo Linchen
www.markettiming.com.br

Financial markets School

Presently my intentions to develop a stockbroking & research office complete with training facilities is taking shape.

1. My intention is to setup an office which offers quality trading facilities , atmosphere and culture from the lessons I learned in typical Brokerage Trading rooms.


2. Can I replicate the atmosphere of University Research Lab with the precision and quality which Brett often describes. It reminds me of Victor's Comments.


3. SMB Training is a pointer in this direction with their daily rigorous structure for preparation, execution and review.


4. The advantage of training operation gives a feedback mechanism and I feel it a natural extension for my academic background


5. Presently youth interested to learn about Financial Markets need more quality training facilities which are accesible, practical oriented, free of anecdotal nonsense,ability to validate with data,Scientific appraoch of viewing the markets.


6. These are available at big cities and reputed institutes like NISM, IICM, IITs etc which are out of reach for Graduates and Other persons interested to make a career in stockmarket or trying to become Professional Traders.


7. Another aspect of developing a professional approach to trading and speculation by retail investors with the help of good information and ways to approach this data can be an area which needs intervention and offers scope for value creation.


8. Is there a positive feedback to Market Training and related activities like Broking, PMS and Research. Since Market is a truly a knowledge and information business, I would hypothesise there are increasing returns to investment in Knowledge creation and dissemination.

Wonderful world of Econometrics

Financial Econometrics combines financial theory with econometric methods for forecasting.

1. The need for crunching huge data with availability of databases is bringing Financial Econometrics to the fore.


2. Some of the excellent authors in this field I came across are Chris Brooks, Tsay, Eric Zivot,Carol Alexander


3. I have yet to find an accesible book in the Indian Context with finacial data from Indian Exchanges. I hope NISM will bring out such a work. It could be good companion for their NSMD database. HF data analysis in the context of Indian Markets is a growing and important area.


4. High Frequency trading and Algorithmic Trading is adding to the requirement of familiarity with Financial Econometrics.


5. I think there are lot issues which traders implicitly assume needs to be empirically validated. Some of the examples are

Open Interest (OI) data in Futures as a predictor for nextday's Spot price

TEA near BSE

After NISM workshop is over myself and Mr Srinivasan, PhD Scholar with Pondichery University have gone to BSE.

1. Here I could feel the seductive nature of stockmarket as the participants gather watching around the ticker. This reminded me of the feelings expressed by Victor Niederhoffer on Visiting NYMEX floor.


2. Volatility of markets is a contributing feature to the seduction of stockmarket. Market will die if there is no volatility. I think many academic papers are starting to recognise and defferentiate between information induced volatility and spurious volatility.


3. We have visited major bookstores like Bookzone & Sterling book house & Strandbook stall near CST railway station.


4. We have spent time near Gateway of India and taken photographs at TajHotel.

Learnings from NISM

Attending NISM workshop had been an enriching experience .

1. The unique format of closely tracking the session structure without random lectures from different speakers had given depth to the topic.


2. The group is cohesive with background in finance and statistics that enhanced discussions and interaction among the group.


3. Lot of my questions regarding empirical research in finance particularly market microstructure were resolved.


4. I am able to access and become comfortable with econometric terminology and financial interpretation.


5. Having a trading experience in markets gave me a unique lens to understand the empirical and theoretical angle in the discussions.