Derivatives trading turnover to touch Rs 100 crore

Derivatives trading turnover to touch Rs 100 crore

OCT 14: Derivatives trading introduced in the country for the first time by the Bombay Stock Exchange (BSE) in June last beginning with trading in index futures expects to touch Rs 100 crore a day by March next.

Justifying the great expectations about the prospects ofnsex futures, Sanjiv Mehta said that Sensex was being used by institutional investors in India and abroad,money managers and small investors to describe the mood of Indian stock markets and considered it as an effecitive proxy of Indian stock markets.

Other reasons cited for the anticipated popularity of Sensex futures are lower brokerage costs, capital adequacy and margin requirements involved in index futures trading and the fact that the impact cost will be much lower in the case of stock index futures where stocks are traded in packaged forms according to Mehta.

He said that an array of mutual funds were taking internal approvals for particiapting in Sensex futures trading while accounting and taxation guidelines regarding derivatives trading were also being finalised by the Institute of Chartered Accounts of India (ICAI) paving the way for increased popularity of the new product.

He also expected that that BSE's latest offer of limited trading membership on its derivatives segement would attract many to use the new platform without actually becoming a member on the equity or cash segment of the BSE.

M S Narayanaswamy, president of the Madras Stock Exchange said that the MSE was planning to associate with the BSE to retailing the new product in the entire south.

According to Sanjiv Mehta, worldwide it had been noticed that derivatives markets volume was higher than the volumes of the cash market. "It is too early to compare the volume of futures in the Indian context at present. The market should be allowed to develop before any conclusions can be made", he added.

Mehta said the BSE was also planning to launch other derivative products in the next few months. To begin with BSE would introduce index options and options on individual stocks by early next year. Plans are also underway to launch covered warrants and interest rate futures and currency futures subject to SEBI and RBI clearance, Mehta said.