The Bombay Stock Exchange (BSE) has entered into a licencing agreement with International Securities Exchange (ISE), a wholly owned subsidiary of Eurex, to launch a host of new derivative products in India.
Eurex,which is a leading global derivative exchange, is jointly operated by SIX Swiss Exchange AG and Deutsche B?rse AG, which in turn has a 5% stake in BSE. The move is expected to help the exchange revive its ailing derivative segment where its rival National Stock Exchange (NSE) is commanding a market share of close to 100% with an average daily turnover of R1.34 lakh crore.
As part of the agreement, BSE will be seeking approval from Sebi to launch derivative products for Indian investors based on innovative ISE indices, which will be part of BSE?s futures and options product basket.
These will be F&O (futures and options) contracts on stock indices based on companies specialising in certain sectors like oil & exploration or mining business among others which has a strong correlation with the underlying commodities. These could also be stock indices based on companies specialising in certain geographies,? said Sayee Sreenivasan, head of product strategy and development at BSE adding that the exchange will figure out what exactly suits Indian conditions and investors interest.
The agreement comes on the back of a similar deal that NSE had inked last year with Chicago Mercantile Exchange (CME) for the launch of rupee-denominated futures contract in Dow Jones and S&P 500 indices, tracked closely by global investors. Moreover, NSE has also signed a memorandum of understanding with London Stock Exchange (LSE) to launch futures contract in FTSE 100 index. Experts believe the introduction of such indices will help domestic investors to diversify their portfolio beyond Indian borders.