The National Stock Exchange is planning to launch quanto cross-currency derivatives or quanto derivatives. It now seeks approval from RBI as per the details mentioned in its DRHP with SEBI for its IPO.
TL;DR
NSE has approached the RBI for approval to launch NSE quanto cross-currency derivatives, as revealed in its SEBI filed DRHP.
A quanto derivative lets investors take exposure to the exchange rate between two foreign currencies.
The move is aimed to revive sluggish exchange traded currency derivatives volume on NSE.
What are Quanto Derivatives?
Quanto, short for “quantity adjusted”, derivatives are contracts that track the movement of foreign currency pairs without exposing the investor to the settlement currency’s fluctuation.
In simple terms, the investors can look how Euro moves against the dollar, but any profit or loss gets converted and paid out in a different, fixed currency under a pre-agreed conversion formula.
This structure wipes out one layer of risk entirely; the investor doesn’t need to worry about how the settlement currency itself is behaving.
This differs from standard cross-currency derivatives that NSE and BSE already offer on pairs like EUR-USD, GBP-USD, and USD-JPY.
Why is NSE pursuing Quanto Derivatives?
The timing is just not incidental.
Exchange-traded currency derivatives volumes in India have been on a steep decline since April 2024. It was after RBI introduced a mandate requiring participants to demonstrate an actual underlying contracted exposure to foreign currency before trading in the currency derivatives segments. This confined exchange-traded rupee derivatives to genuine hedging use rather than speculative trading.
The impact in turnover was immediate. NSE’s average daily turnover in currency derivatives fell from ₹33,165 crore in March 2024 to just ₹12,100 crore in April in the same year. The decline did not stop till June 2026. The average daily turnover was hovering around ₹5,000 crore. Meanwhile the BSE currency derivatives segment has seen zero turnover since January 2025.
NSE’s push to quanto derivatives comes amid an effort to revive exchange-traded currency volumes, which have seen limited depth for years despite existing product offerings.
(Source: Business Standard dated July 5, 2026)
The disclosure surfaced specifically through the exchange’s DRHP for its own IPO, filed with SEBI. This indicates the company is positioning new product lines as a part of its future growth strategy.
NSE was historically the first Indian exchange to receive in-principle SEBI approval for launching a currency derivatives segment, giving it an established regulatory record in this space.
A foreign exchange dealer at a state-owned bank echoed the sentiment that if cross-currency derivatives are allowed beyond the rupee, it could reinvigorate exchange trading activity.
The purpose is to draw trading activity that happens outside the formal exchange system back onto regulated platforms.
Also Read: NSE September IPO Launch for $3 billion.
Conclusion
NSE quanto cross-currency derivatives push reflects a broader effort to reverse a multi year slide in currency derivatives trading. By offering exposure to global currency pairs settled through a fixed, pre-determined mechanism, NSE now hopes to attract both domestic and overseas investors looking for regulated ways to speculate on currency movements.
Whether it will be approved will depend on how appealing the products prove once the trading begins, but for now it is a clear signal that Indian exchanges are looking beyond the rupee to stay relevant in currency markets.
FAQs
What is a Quanto Derivative?
A financial contract that lets investors take exposure to the exchange rate between two foreign currencies, while profit and losses are settled in a separate, pre-fixed currency.
Why has NSE approached RBI for this product?
NSE needs regulatory approval to launch new derivatives products.
Why did currency derivative volumes fall in India?
It was after April 2024, when RBI mandated underlying contracted exposure to trade in exchange-traded currency derivatives. This had restricted the segment largely to hedging use.
What other products is NSE seeking approval for?
NSE is also awaiting regulatory approval for thermal coal futures and interest rate derivatives on a corporate bond index.
Has NSE confirmed details about the launch timeline?
No, NSE only confirmed that it had filed DRHP with SEBI.
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