NSE, CFTC talk hedge funds in derivatives

Participation of US hedge funds in domestic single stock derivatives has halted after the p-note ban

India’s biggest bourse, the National Stock Exchange (NSE), is lobbying with the US derivatives market regulator, Commodity Futures Trading Commission (CFTC), to allow greater participation of US-based hedge funds in the domestic derivatives market.

The current rules don’t permit any US hedge fund to invest in futures other than those approved by CFTC. These funds used to take the participatory notes (p-notes) route to trade in Indian single stock futures, as this doesn’t amount to direct exposure. However, the Indian markets regulator, Securities and Exchange Board of India’s (Sebi) decision to ban p-note participants from taking unhedged positions in the futures