Sebi Gives Final Nod For Trade In Derivatives

The Securities and Exchange Board of India yesterday allowed derivatives trading in the country. The trading will begin with index futures contracts.

The permission was granted simultaneously to the Bombay Stock Exchange and the National Stock Exchange. The trading in futures contracts will be based on the 30-scrip BSE sensex and the S&P CNX Nifty Index.

The entire trading and settlement processes will be in accordance with the rules, bye-laws and regulations of the respective exchanges and their clearing houses and corporations approved by the Securities and Exchange Board and notified in the official gazette.

The regulator has also allowed the respective clearing houses and corporations involved in the trading and settlement procedures to deal in Sebi-approved derivatives contracts.

 

Already, 108 eligible trading and clearing members of the NSE and the BSE have been granted registration by Sebi.

Ravi Narain, deputy managing director of the NSE, said, "In all probability, the exchange would be able to commence derivatives trading on the S&P CNX Nifty Index by June 12, 2000."

Similarly Anand Rathi, president of the Bombay Stock Exchange, said his exchange would soon announce a date to commence derivatives trading.

"With Sebi giving a go-ahead to the BSE to commence derivatives trading, as per the rules and bye-laws of the derivatives segment notified in the official gazette, we will announce the date on Friday," Rathi said.

Although the announcement comes as no surprise to market participants, the Bombay Stock Exchange is giving all its members 12 to 15 days to make all the arrangements, including tying up finances and putting in order their back offices to handle derivatives trading.

While the BSE can formally commence the derivatives trading as mentioned in the gazette, the NSE is expected to commence shortly as its notification to the official gazette is in the process.

The entire process is likely to take less than a week and the notification is expected on June 3. Subsequently, the exchanges will be entitled to commence operations.