Sebi continues to issue draft proposals and circulars, one after another, in 2008. After a detailed proposal on primary issuance process for corporate bond, the regulator has now issued a circular for the introduction of index options with longer tenure.
Sebi said in a statement that it has decided to launch long-term options on Bombay Stock Exchange (BSE) Sensex and National Stock Exchange (NSE) Nifty with tenures of up to three years. The option cycle of three serial months contracts will continue to exist. “The following three quarterly months of the cycle March, June, September and December would be available,? the circular said.
“Five following semi-annual months of the cycle June, December would be available, so that at any point in time there would be options contract with atleast three years tenure available for investors,? the regulator said.
Sebi said that the risk containment and other measures applicable for existing exchange traded equity index option contracts shall be extended suitably to long-term option contracts on index. Sebi?s decision has come in wake of the Sebi Derivatives Market Review Committee (DMRC) headed by professor M Rammohan Rao?s recommendation for the introduction of new derivatives products in the Indian market.
Among other recommendations, the committee has recommended for the option contracts on indices and stocks with life or tenure of up to five years (60 months).
Sebi said that the circular has been issued under section 11 of the Sebi Act, 1992 to promote the development of the securities market.
Presently, Sebi is working to unveil guidelines on Real Estate Mutual Fund (REMF).