Regional exchanges vie for F&O trading

After embarking on the revival path following a decade of slumber, the regional stock exchanges are now eager to catch up with their business at a fast pace. The Kanpur-based Uttar Pradesh Stock Exchange (UPSE), along with some other regional exchanges, now wants the Securities and Exchange Board of India (Sebi) to gauge the prospects of allowing Futures and Options (F&O) trading on their platforms.

The exchanges, which had been lying dormant, were given a new lease of life by Sebi after it allowed them to float their subsidiaries which could conduct stock trading with a country-wide network. Thereafter, several regional stock exchanges, including UPSE, began trading.

Now, they want to gain access to the popular trading feature of Futures and Options. “We have submitted a proposal demanding the right to trade in F&Os in interest of brokers, investors and national economy in general,” said Sushil Kumar Kanodia, trading member-director of UPSE.

Kanodia added that the futures contracts were yet to reach small investors and traders.

“We hope to attract more investors to the stock market by educating them about the safety features implemented in modern F&O trading apart from the flexibility and more delivery time they offer,” he explained.

UPSE managing director Bharat Kumar Nadhani told Business Standard that the proposal also envisaged imposing inbuilt restrictions on such trading in regional exchanges due to their limited financial capacities. “We have ourselves proposed that the number of scrips that may be allowed to be traded must be reduced apart from increasing the net worth limit of brokers from present Rs 10 lakh,” he added.

The exchange has also proposed to reduce the trading lot sizes by over 75 per cent.

“If we are allowed the permission, it will help in decentralising the financial markets of country, and in turn help to bridle market manipulations,” Nadhani added.

According to V P Mishra, CEO, UPSE, F & O trading, if allowed, would be conducted on main platform of Regional Stock Exchanges as the National Stock Exchange (NSE) F & O Platform is available to most of the subsidiaries of the Regional Stock Exchanges.

“The proposal is significant for regional exchanges as besides providing access to F&O segment for the small investors and traders, the almost idle platform of Regional Stock Exchanges would get revitalised,” added Mishra.