MUMBAI, MARCH 31: The Bombay Stock Exchange (BSE) is working with two international exchanges to prepare adequate safeguards for derivatives trading (a form of speculative forward trading in derivative products like index and currencies) when it is launched in India.``We are working with two exchanges globally who have got a lot of experience trading in derivatives to ensure as and when we start we take enough precaution for safety," BSE president M G Damani said. However, he declined to name the exchanges.
Damani said the BSE was waiting for the authorities to draw up rules for the launch of the derivatives. ``We are ready to launch trading in derivatives the day it is legally permitted with many more safeguards than prescribed by the Securities and Exchange Board of India (SEBI),'' he said.
It may be recalled that Damani had cautioned SEBI against undue haste inintroducing derivatives trading. ``I ...have some reservations about time and pre-requisites before the introduction of equity derivatives,''Damani wrote in his dissent note that formed part of a SEBI report. BSE's rival National Stock Exchange (NSE) has already initiated work to introduce derivatives trading.
``In my opinion, the time is not right for it (derivatives trading),'' he said, adding, ``But I am not against it. That being clear, I see no reason why the exchange should not prepare itself."
Damani said the BSE has appointed a 16-member index committee for continuous evaluation and review of market developments. ``The market dynamics are expected to change with further PSU disinvestment and may require changes even in the BSE Sensex,'' he said, adding that the BSE would launch a new broad based index called the `BSE-500 index' shortly.
The BSE sensex is the most popular stock market index among 67 per cent of retail investors in four metros, followed by the Nifty (NSE-50) at 18 per cent, according a study prepared by MARG Financial Research. ``The sensex was also considered the most reliable stock market index by over 40 per centof retail investors, followed by the NSE-50 at 29 per cent. The BSE-100 was recognised by the UTI Institute of Capital Markets as the best suited for hedging,'' Damani said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
