Few takers for Nifty futures on Chicago Mercantile Exchange

Working closely with participants to promote Nifty outside Asia, says the US bourse.

Futures contracts on the National Stock Exchange (NSE) benchmark, the Nifty index, launched nearly 18 months earlier on the Chicago Mercantile Exchange (CME), have not attracted traders’ interest outside Asia so far.

In March 2010, the CME Group and NSE signed a cross-listing arrangement, allowing CME to launch dollar-denominated Nifty futures contracts on its platform. Under this agreement, NSE got the rights to launch rupee-denominated futures contracts on the benchmark US stock indices, the Dow Jones Industrial Average (DJIA) and the S&P 500, in India.

Following the arrangement, the CME Group launched dollar-denominated E-Mini and E-Micro futures contracts on Nifty on its Globex electronic trading platform in July 2010. However, these contracts have not picked up on the largest futures exchange in the US.

 

Daily average trading volume in E-Mini Nifty futures contracts was almost zero in this month till December 12. Those in E-Micro Nifty futures contracts were just 39 contracts. In contrast, Nifty futures contracts on the Singapore Exchange (SGX) have seen daily average trading volume of 33,985 contracts in this month till December 12, data compiled by the Business Standard Research Bureau showed.

“CME Group and NSE have a mutual desire to promote the Nifty outside of Asia and promote access to the DJIAe and S&P 500 within India. This is part of a long-term commitment to expand our mutual product equity index portfolios,” said Scot Warren, managing director, equity products and index services, CME, in response to an e-mail query. “We recognise the success that SGX has with the Nifty outside of India and continue to work closely with market participants to expand interest in other global regions. We will continue to expand awareness of how well the Nifty reflects the Indian equity market and build interest among liquidity providers.”

Nifty futures contracts, launched on SGX in September 2000, have seen a sharp increase in traders’ interest in the past five years. Average trading volume here has jumped 16 times to 56,148 contracts in 2011 so far, from 3,239 contracts in 2007, shows data compiled by the BS Research Bureau.

Interestingly, daily average volumes in futures contracts on the DJIA and S&P 500, launched on NSE in August this year, has shown steady increase. Daily average volume in DJIA futures on the NSE has jumped nearly 80 per cent to 3,840 contracts in this month so far from 2,140 contracts in September. Similarly, daily average volume in the S&P 500 futures on India’s largest exchange has increased 134 per cent to 2,307 contracts in this month so far from 983 contracts in September.

And, not just in the US. Derivatives on an Indian stock index have also failed to attract traders in Europe. Futures and options contracts on the Bombay Stock Exchange benchmark, the Sensex, launched on Europe’s largest derivatives exchange, the Eurex, in October last year, have seen very little trading till date.