Date:15/09/2005 URL: http://www.thehindubusinessline.com/2005/09/15/stories/2005091504000100.htm

Back Scope of MF participation in derivatives enhanced: SEBI

Our bureau

Mumbai , Sept. 14

The Securities and Exchange Board of India (SEBI) has announced that it has enhanced the scope of mutual funds' participation in the derivatives market.

The capital market regulator on Wednesday said it has permitted mutual funds to participate in the derivatives at par with foreign institutional investors (FIIs).

At present, mutual funds are permitted limited participation in the derivatives market mainly for hedging and rebalancing their portfolio. This restriction was imposed in 2002.

"Since then, there have been several changes in the structure of the cash market and the volumes in the derivatives market have increased manifold. It is also observed that there has been a significant increase in retail participation in the derivatives market," SEBI said.

SEBI said mutual funds would be treated at par with a registered FII in respect of position limits in index futures, index options, stock options and stock futures contracts. "Mutual funds will be considered as trading members like registered FIIs and the schemes of mutual funds will be treated as clients like sub-accounts of FIIs," it said.