Move to remove barriers in derivatives market

By Our Special Correspondent

MUMBAI, AUG. 15. The first meeting of the advisory committee on derivatives which met here yesterday felt that the market was at a nascent stage and the introduction of options on more stocks might adversely affect the liquidity in the existing stock option contracts.

The committee therefore decided that any increase in number of option contracts should be after the market attains a level of maturity.

The committee felt that various barriers in the market for different categories of participants should be streamlined and standardised to the extent possible so as to ensure equal access to all categories of investors.

Further, for the purpose of efficient price convergence between the futures and the cash market, the institutions should be permitted to create segregated short selling account with a limit on the overall exposure capped to the exposure in the derivatives market.

The committee also proposed that banks should also be permitted to participate in the derivatives market.

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Section  : Business
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