BSE to launch F&O contracts on Bharat-22 index from September 3

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Published: August 30, 2018 4:15:28 PM

Futures and options (F&O) contracts will be introduced on Bharat-22 index from September 3 by Bombay Stock Exchange (BSE).

f&o TRADING on bharat 22 etfA futures contract is a legal binding agreement is to buy or sell the underlying security on some future data.

Futures and options (F&O) contracts will be introduced on Bharat-22 index from September 3 by Bombay Stock Exchange (BSE). “The exchange shall introduce futures and options contracts on S&P BSE Bharat-22 Index in equity derivatives segment with effect from September 3, 2018,” BSE said in a circular.

Bharat-22 index is a combination of stocks of various key central public sector enterprises (CPSEs), public sector banks (PSBs) and blue chip private companies like Larsen & Toubro (L&T), Axis Bank and ITC. The other companies part of the index including ONGC, IOC, SBI, BPCL, Coal India, Nalco, Bharat Electronics, REC, Power Finance Corp, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, Power Grid Corporation, NLC India, Indian Bank and Bank of Baroda.

There are more than 200 securities available for trading in the F&O segment. Many news stocks were also added to the segment very recently.

Derivative is referred to “a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes,” according to Investopedia.

There are two kinds of derivative contracts namely futures and options. A futures contract is a  legal binding agreement is to buy or sell the underlying security on some future data. On the other hand, options contract offers the holder or buyers of the contract the right without any obligation to buy or sell the underlying asset at a predetermined price within or at end of a specified period.

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