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Currency derivatives — CDS futures and options charges

Currency derivatives let you trade forex pairs like USDINR on Indian exchanges. The charges are lower than equity F&O in some areas — but the contract sizes and nuances are different.

What are currency derivatives?

Currency derivatives are futures and options contracts on foreign exchange rates, traded on NSE and BSE. Unlike the forex market abroad, Indian currency derivatives are exchange-traded, regulated by SEBI, and settled in Indian rupees.

You're not actually buying or selling foreign currency. You're trading contracts whose value is derived from the exchange rate between two currencies. All profits and losses are settled in INR.

Which currency pairs are available?

  • USDINR: The most liquid and heavily traded pair. Contract size is $1,000 (roughly ₹83,000–₹85,000). This is where most retail CDS activity happens.
  • EURINR: Contract size is EUR 1,000. Lower liquidity than USDINR but still tradeable for directional views on the Euro.
  • GBPINR: Contract size is GBP 1,000. Thin liquidity outside the front-month contract — bid-ask spreads can be wide.
  • JPYINR: Contract size is JPY 1,00,000. Niche pair with limited retail interest and the widest spreads among the four.

Cross-currency pairs like EURUSD, GBPUSD, and USDJPY are also available as futures on NSE, but liquidity is extremely thin. Most traders stick to USDINR.

Brokerage comparison for CDS

Most discount brokers charge the same flat brokerage for CDS as they do for equity F&O — typically ₹20 per order or less. Since currency contract values are smaller (₹83,000 vs. ₹15–₹20 lakh for Nifty), the brokerage-to-contract-value ratio is higher in CDS.

  • Zerodha: ₹20 per order or 0.03%, whichever is lower.
  • Dhan: ₹20 per order for futures, ₹20 per order for options.
  • Upstox: ₹20 per order across all CDS segments.
  • ICICI Direct: Percentage-based, typically 0.05%–0.1% per trade — significantly more expensive at scale.

Regulatory charges on CDS

The good news: STT on currency derivatives is lower than equity F&O. Currency options have no STT on the buy side, and the sell side STT is 0.0125% on the premium (compared to 0.0625% for equity options).

  • STT: 0.01% on sell side for currency futures, 0.0125% on sell side for currency options.
  • Exchange transaction charge: NSE charges around 0.0009% for CDS — lower than the equity segment.
  • Stamp duty: Same state-wise rates as equity derivatives.
  • GST: 18% on brokerage + exchange charges, same as all segments.

Overall, the regulatory burden on CDS trades is lighter than equity F&O, making it relatively cheaper per contract from a charges perspective.

Who should trade CDS?

Currency derivatives are primarily used by importers and exporters to hedge foreign exchange risk. Retail traders use them for directional bets on the rupee, though volumes are much lower than equity F&O.

If you're a retail trader, be aware that USDINR moves are typically small (0.1–0.3% on most days), so profits per contract are limited. You need large position sizes or leverage to generate meaningful returns — which also amplifies risk.

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