Cash-Futures Spread or Badla in BSE F&O is back

A Cash-Futures Spread (CFS) is a new combination spread product being introduced in BSE’s Futures & Options segment.

Source: Moneycontrol.com

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A Cash-Futures Spread (CFS) is a new combination spread product being introduced in BSE’s Futures & Options segment. The CFS spread product shall be offered on all those underlying stocks on which futures & options instruments are available for trading in BSE F&O segment.

Salient Features of Cash-Futures Spread (CFS) Product

The CFS instruments shall consist of 2 legs viz. one equity segment leg and 2nd leg shall be the futures instrument leg. To facilitate this, 3 new cash-futures spread instruments shall be available for trading at any time, corresponding to the current, near and far monthly futures instruments on that underlying asset.

Siddharth Bhamre, Head of Equity Derivatives at Angel Broking says, “There are many softwares available in markets which provide such facilities of generating two legged arbitrage (Badla) trade by feeding in one single trade which BSE has termed as CFS. Now with exchange themselves embedding such trades in their platform, is going to add value to their users.

The product is good instrument for active cash future arbitrageurs but main concern would be liquidity. As there is not enough liquidity in BSE stock futures segment, CFS may not attract attention initially. If and only if we see liquidity increasing in BSE stock futures then traders may find any meaningful arbitrage opportunities, till then CFS may see only paltry volumes.”