The Bombay Stock Exchange (BSE) has announced its first major strategic initiative with the US Futures Exchange (USFE), that will allow dollar-denominated BSE Sensex futures to be traded on the USFE.
The USFE?s Sensex contract will start trading from February 22, 2008 and will allow US investors to directly participate in India?s booming equity markets for the first time. Till now there was no derivative product based on the Indian stock markets for American investors. They could only invest through American Depository Receipts floated by Indian companies in USA.
The size of the new USFE Sensex contract will be same as the existing BSE Sensex futures traded on the exchange and will be available for trading for 23 hours a day, Monday to Friday. It will be cash-settled.
The new product will be marketed across the globe by MF Global, which owns a controlling stake in USFE.
?This agreement will provide the opportunity for US investors and global portfolio managers to gain exposure to India?s unprecedented economic growth, expansion and investment perfomance,? said Kevin Davis, chairman, USFE, while announcing the strategic tie-up with BSE.
?The new product will be available to global investors for initiating their participation in the Indian market and at the same time help us in our effort to be a global player,? said BSE MD and CEO Rajnikant Patel.
?In the past one year, volumes on the BSE derivative segment have increased to 3% of the total F&O volume in the country and we are quite optimistic that the new initiative would definitely improve our business,? said Patel.
Market experts say the BSE?s move will definitely help the exchange revive its derivative segment, which at present lacks the much-needed foreign participation to provide depth and liquidity. The new product will also help the exchange to market the Sensex brand with global portfolio managers.