Business

States urged to join new pension system

— PHOTO: PAUL NORONHA

BETTING ON FUTURES: Union Finance Minister P. Chidambaram ringing the bell marking the inauguration of currency futures trading on the National Stock Exchange in Mumbai on Friday. Shyamala Gopinath (second from left), Deputy Governor, RBI, C. B. Bhave (left), Chairman, SEBI, and Ravi Narain, Managing Director and CEO, NSE, look on.

MUMBAI: Union Finance Minister P. Chidambaram on Friday urged all States to join the New Pension System (NPS) introduced by the Union Government.

Nineteen State governments have joined the New Pension System (NPS). “Barring three States, all other States in principle agreed to join the system. I urge other States also to join the new pension system,” said Mr. Chidambaram while launching the Central Record Keeping Agency (CRA) of NSDL, here.

“It’s a logical step, compassionate step and its pro-poor policy,” Mr. Chidambaram added. On dematerialisation, Mr. Chidambaram said, “dematerialisation of securities is a major success in our reform policy.”

Mr. Chidambaram also asked the Pension Fund Regulatory and Development Authority (PFRDA) to frame a scheme which could be availed of by any citizen of the country.

Mr. Chidambaram also launched currency futures by the National Stock Exchange (NSE) on Friday.

As per the BIS Triennial survey on the global foreign exchange and derivatives market activity (2007), the foreign exchange market in India has grown into the 16th largest market in the world in terms of total daily turnover which was $34 billion in 2007.

“The biggest challenge in designing a framework for currency futures in India was the contextual setting in which the foreign exchange market operates in India. There was no ready template available internationally that we could draw upon since most of the countries that have active currency futures markets are those which are relatively more convertible on the capital account. The endeavour was to have a framework which genuinely sought to provide an additional avenue for risk management while maintaining the integrity of the existing market microstructure,” said Shyamala Gopinath, Deputy Governor, Reserve Bank of India, at the launching function at NSE.

The NSE became the first exchange that launched exchange traded currency futures in the country. On the first day, on Friday, trading started at 9 am and at the end of trading at 5 pm the exchange recorded 65, 798 contracts.

Most trades (with 42,964 contracts), recorded for the near month contract ending September 25, 2008, were at Rs. 44.02 a dollar. Twelve month contracts ending August 27, 2009,were traded at Rs. 45.05 a dollar. The RBI reference rate was at Rs. 43.79 a dollar.

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