BSE plans options in index trading soon

By Our Corporate Reporter

CHENNAI, OCT. 14. The Bombay Stock Exchange plans to introduce trading in index options in a two-months timeframe. Sequentially it would also introduce covered warrants and options on individual stocks, according to Dr. Sanjiv Mehta, Deputy CEO, derivatives segment of the Exchange.

Addressing presspersons here today at a derivatives training programme, he said plans were also on to launch interest rate futures and currency futures subject to approval from the Securities and Exchange Board of India and the Reserve Bank of India.

Dr. Mehta said the response to the introduction of trading in index futures in June this year underlying BSE 30 Sensex was satisfactory with an average trading volume of Rs. 7-8 crores daily. The broking community had been receptive to the derivatives segment with 67 per cent of them using this platform. So far, four contracts pertaining to June, July, August and September had been completed successfully and he hoped to see impressive volumes in futures trading in the next six months. There was a growing awareness in the retail segment while in the institutional segment the approvals and operational problems were being taken care of, he said.

The RBI's decision to allow banks to invest upto five per cent of total outstanding credit in equities would boost trade volumes in the cash segment and equity derivatives would prove to be good investments for banks for their short term asset liability and cash management. Also, banks would be using derivatives to hedge their equity investments, Dr. Mehta observed.

With a view to spreading awareness on derivatives, the BSE is organising nationwide training programmes Mr. Ajit Surana, member, BSE, who was here in this connection said over 6,000 persons had been trained under more than 40 programmes in 18 cities.

He said the BSE had decided to offer limited trading membership (LTM) on the derivatives segment of the exchange by inviting applications from all over the country at an entrance fee of Rs. 1 lakh. The applicants need not be members of the exchange but the rules, regulations and other provisions of the derivatives segment, exchange and SEBI would apply to them. They were not entitled to voting rights or become members of the derivatives governing council or any other board, council or committee of the derivatives segment, the exchange or any other segment of the exchange.

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