We
will start currency derivatives very soon on NSE platform.
Derivatives
markets broadly can be classified into two categories, those that
are traded on the exchange and the those traded one to one or
‘over the counter’. They are hence known as
-
Exchange Traded Derivatives
- OTC Derivatives (Over The Counter)
OTC
Equity Derivatives :
| Traditionally
equity derivatives have a long history in India in the OTC
market. |
| Options
of various kinds (called Teji and Mandi and Fatak) in un-organized
markets were traded as early as 1900 in Mumbai. |
| The
SCRA however banned all kind of options in 1956. |
Derivative
Markets today :
| The
prohibition on options in SCRA was removed in 1995. Foreign
currency options in currency pairs other than Rupee were the
first options permitted by RBI. |
| The
Reserve Bank of India has permitted options, interest rate
swaps, currency swaps and other risk reductions OTC derivative
products. |
| Besides
the Forward market in currencies has been a vibrant market
in India for several decades. |
| In
addition the Forward Markets Commission has allowed the setting
up of commodities futures exchanges. Today we have 18 commodities
exchanges most of which trade futures. e.g. The Indian Pepper
and Spice Traders Association (IPSTA) and the Coffee Owners
Futures Exchange of India (COFEI). |
| In
2000 an amendment to the SCRA expanded the definition of securities
to included Derivatives thereby enabling stock exchanges to
trade derivative products. |
| The
year 2000 will herald the introduction of exchange traded
equity derivatives in India for the first time. |
Equity
Derivatives Exchanges in India :
| In
the equity markets both the National Stock Exchange of India
Ltd. (NSE) and The Stock Exchange, Mumbai (BSE) have applied
to SEBI for setting up their derivatives segments. |
| The
exchanges are expected to start trading in Stock Index futures
by mid-May 2000. |
BSE's
and NSE’s plans :
| Both
the exchanges have set-up an in-house segment instead of setting
up a separate exchange for derivatives. |
| BSE’s
Derivatives Segment, will start with Sensex futures as it’s
first product. |
| NSE’s
Futures & Options Segment will be launched with Nifty
futures as the first product. |
Product
Specifications BSE-30 Sensex Futures :
| Contract
Size - Rs. 50 times the Index. |
| Tick
Size - 0.1 points or Rs. 5 |
| Expiry
day - last Thursday of the month |
| Settlement
basis - cash settled |
| Contract
cycle - 3 months |
| Active
contracts - 3 nearest months |
Product
Specifications S&P CNX Nifty Futures
| Contract
Size - Rs. 200 times the Index |
| Tick
Size - 0.05 points or Rs. 10 |
| Expiry
day - last Thursday of the month |
| Settlement
basis - cash settled |
| Contract
cycle - 3 months |
| Active
contracts - 3 nearest months |
