Future Perfect

All government agencies live in Kafka-land. In the early 1980s, two US agencies had a fight over jurisdiction. The Securities Exchange Commission (SEC) and the Commodities and Futures Trading Commission (CFTC) both wanted exclusive control over the single stock future (SSF).

The SEC controls the stock market and the CFTC controls futures trading. So both had a point. The spat reached unseemly dimensions (allegedly including fisticuffs in a US Senate bathroom) before the instrument was banned.

Sebi blindly follows the American pattern, so SSFs were also banned in India. However the Americans have sorted out their dispute after an 18-year freeze. European Exchanges were offering SSFs in US equities by last year.

The competition spurred the legalisation of SSFs in the USA. Sebi then rethought its earlier stand that SSFs were dangerously speculative and allowed their introduction in the same 31 stocks which are cleared for options trading.

SSFs will take a while to catch on. But they are likely to notch up huge volumes once they do. The key is that cash settlement is always allowed. So it