NSE to launch S&P 500, Dow futures in three months

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 next three months, according to officials familiar with the matter.

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 in India.

NSE would soon seek permission from the Securities and Exchange Board of India (Sebi), officials said. India’s biggest stock exchange was in the process of finalising the launch strategy and contract specifications in consultation with CME, they added.
 

NEW BETS

• Contracts on S&P 500, Dow futures to be first on global indices in India 
• NSE to seek Sebi approval to launch S&P 500, Dow futures
• CME helping NSE in product design, launch strategy

“We have been helping NSE with information-sharing and discussing launch strategies,” said Michael Shore, associate director, financial products, CME group, in reply to an e-mail query.

An NSE spokesperson declined comment.

Following the cross-listing arrangement, the CME group launched dollar-denominated E-Mini and E-Micro futures contracts on NSE Nifty on the CME Globex electronic trading platform in July 2010. In January, 6,917 E-Micro Nifty futures contracts were traded on CME, while during the month, 247 E-Micro Nifty futures contracts were traded, according to data on the CME website.

Last month, Sebi issued norms for introducing derivatives contracts on foreign indices, paving the way for Indian stock exchanges to launch trading in leading global indices.

Sebi has laid down two broad criteria. Indices that fulfill any of the two will be allowed to trade in India. Either the foreign index should feature among the top 15 index derivatives globally apart from being traded on some of the leading stock exchanges or it should be broad-based with a market capitalisation (m-cap) of at least $100 billion.

Both S&P 500 and DJIA meet the criteria.

Derivatives contracts based on global indices launched in India will be denominated and settled in Indian rupees and trading will be restricted to Indian residents. The position limits will be similar to domestic stock index derivatives.