Derivatives of four global indices to start trading on BSE from month-end

Indian investors will soon be spoilt for choice on trade in derivatives of global indices

The Bombay Stock Exchange (BSE) is to launch rupee-denominated futures contracts on global indices, such as Brazil’s Ibovespa, Russia’s MICEX, Hong Kong’s Hang Seng and Hang Seng China Enterprises, and South Africa’s FTSE/JSE Top40, on its platform from March 30.

BSE has already obtained approval from the Securities and Exchange Board of India (Sebi) for introducing futures contracts on these global indices, a spokesperson for BSE said in reply to an e-mail query.

Futures and options contracts on the S&P 500 and futures on the Dow Jones Industrial Average are already available for trading on the National Stock Exchange.

The BRICS (Brazil, Russia, India, China and South Africa) Exchanges Alliance (five exchanges in the deal) will begin cross-listing benchmark equity index derivatives on each other’s trading platforms on March 30. Sensex futures will be available for trading on the BM&F Bovespa of Brazil, the MICEX-RTS of Russia and Hong Kong Exchanges & Clearing as the initial representative of China from March 30. Both Sensex futures and options will be available for trading on South Africa’s JSE from the same day.

The five exchanges had announced the formation of the alliance on October 12, 2011, at a World Federation of Exchanges’ conference in Johannesburg, South Africa. In the first stage, the five aim to expand their product offerings beyond their home markets and give investors of each exchange exposure to the BRICS economies.

“The first phase of the BRICS Exchange Alliance is an important step in the further internationalisation of our indices. Investors will have better access to member markets, helping them to diversify their portfolios,” said Madhu Kannan, chief executive officer of BSE.

Apart from the cross-listing of the benchmark equity index derivatives, the exchanges plan to work together to develop new equity index-related products representing the BRICS economies for cross-listing of derivatives and cash market product offerings in the second phase of the alliance, the joint statement said.

The third phase may include product development and cooperation in additional asset classes and services.