Standard Chartered structures Sri Lanka’s first rupee option
Standard Chartered Bank on Friday structured and completed Sri Lanka’s first Rupee option.
The Bank said in a statement it was also instrumental in introducing this product to the local market having worked closely with the Central Bank of Sri Lanka to obtain regulatory approval – which is now available for all banks.
Standard Chartered has completed two historic transactions the very first USD/LKR call option and the USD/LKR Put option in the Sri Lanka market, with Prima Ceylon Ltd and Brandix Lanka Ltd respectively.
“The unique feature of a Rupee option is that it gives importers and exporters greater freedom when hedging/ covering their Rupee/ USD exposures. Previously when booking forward, customers were compelled to deliver on a contract, whether or not the market rate was favourable. A Rupee option gives the buyer the right but not the obligation to either buy or sell the currency at an agreed price, on an agreed date for an agreed amount, for a payment of an upfront premium.This would mean that, on the maturity date, if the market rate is in the clients favour, then the client will exercise his right to buy or sell at market levels. If the market rate is against the client, he will exercise his right to buy or sell at the contracted price,” the statement said.
Clive Haswell, CEO Standard Chartered Sri Lanka, said: “We are delighted to introduce yet another global product to Sri Lanka. Standard Chartered is known in Sri Lanka for innovation and the introduction of new products in every segment it works which then quickly become industry norms.”