NSE to launch futures contracts on S&P 500, DJIA

The National Stock Exchange (NSE) is likely to launch futures contracts on benchmark US indices -- S&P 500 and Dow Jones Industrial Average (DJIA) -- in the near future, a senior exchange official said today.

"We have received permission from the market regulator Securities and Exchange Board of India (Sebi) to launch futures contract on S&P 500 and DJIA. Now we are awaiting for approval of options contract on S&P 500 from Sebi. We are looking at launching both futures and option contracts simultaneously," NSE Senior Vice-President R Sundararaman told reporters here.

In March 2010, NSE signed a cross-listing agreement with the CME group, which gave it exclusive rights to launch futures contracts on S&P 500 and DJIA.

The regulator has permitted introduction of derivatives on foreign indices in January, 2011.

Commenting on the rationale for introduction of these contracts, Sundararaman said, it will provide unique and first-of-a-kind way to gain unlimited and hassle-free exposure to the US market.

There are no currency risks as the contracts are rupee dominated and it can be used as effective portfolio diversification and hedging tools.