Europe’s rules for non-EU countries could impact the trading of offshore Indian Rupee futures with exchanges in Dubai and Singapore already vying for market share in the currency.

The Singapore Exchange (SGX) and the Dubai Gold and Commodities Exchange (DGCX) represent the two leading offshore centres for the trading of Rupee derivatives.

DGCX boasts much higher volumes in futures at present but SGX could be set to benefit from forthcoming European regulation as its relatively-new offering continues to gain traction.

The European Securities and Markets Authority (Esma) is reviewing non-EU countries to identify conflicting requirements with its own clearing and reporting obligations.

The regulator has recommended conditional country equivalence for Singapore, as part of its technical advices, for nine non-EU countries including Australia, Hong Kong and the US.

Dubai’s status is as yet unknown. Though DGCX has applied for CCP recognition under Emir.

DGCX said it would not comment on speculation but Gaurang Desai, chief operating officer at the exchange, acknowledged the regulatory arena is undergoing a lot of change at the moment.

Over 100,000 Indian Rupee futures were traded on DGCX during May, making it the most actively traded outside of India.

This compared to the 18,621 trades on SGX, though the contract is still growing just eight months after launch.

“We can confirm that DGCX is still trading more than 40% of the total value of the INR Futures traded globally and we will continue to see increased interest for our INR contract,” said Desai.

Countries not seen as equivalent by Esma will likely face issues when it comes to attracting European trading after the regulation takes effect.

Both DGCX and SGX have applied to Esma for clearing recognition under the European Markets Infrastructure Regulation (Emir) and currently await confirmation.

The Rupee has benefited from recent cutbacks on quantitative easing in the US, which strengthened emerging market currencies against the dollar.

The currency has been particularly volatile in comparison to the dollar over the past decade leading to heightened levels of trading across exchanges offering Rupee products.