MCX-SX to start 'SX40' derivatives from mid-May

Tick size for index futures, options contracts based on SX40 has been set at Rs 0.05

MCX-SX will begin trading on derivatives of its benchmark index, the SX-40, from the middle of next month.

Trading would begin from May 15, 2013, according to a statement from the exchange, which also noted an upper limit on sectoral exposure for the index.

“SX40 uses a capping methodology, which is used for capping exposure of a specific sector and industry classification of scrips included in the index.  This cap is set at 20%....(this)....reduces the industry bias and ensures better industry representation of the underlying market,” it said.

The tick size for the index futures as well as the options contracts based on SX40 has been set at Rs.0.05. The contracts will be available with one, two and three month maturities. All three contracts would be launched at the same time.

MCX-SX has adopted the Industry Classification Benchmark (ICB), a global company classification standard of the FTSE Group, according to the release.

“The globally recognised ICB standard offers increased clarity, better structure and universality to meet the investors’ needs and enables accurate and relevant sector classification and monitoring of the market,” said Rohtas Handa, Managing Director, India & Global Relationship Management, FTSE Group.