'NSE-CME cross-listing pact good for diverse portfolio'

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The National Stock Exchange (NSE) has signed a cross-listing pact with the Chicago Mercantile Exchange (CME). Nifty futures will be traded on the CME, while the Dow Jones and S&P 500 futures will be traded on the NSE. The move is a step towards alignment to global markets.

In an interview with CNBC-TV18, Satya Narayan Bansal, Chief Executive Officer of Barclays Wealth and Sanjiv Shah, Executive Director of Benchmark Asset Management, discuss this move.

Below is a verbatim transcript of an exclusive interview with Satya Narayan Bansal and Sanjiv Shah on CNBC-TV18. Also watch the accompanying video.

Q: Do you think this opens up opportunities for your high net worth individual (HNI) clients, the Dow and the S&P futures in India?

Bansal: Yes I believe this is a great opportunity for the clients in India who are looking for portfolio diversification. We have largely seen a home bias from clients so far maybe because that was a lack of opportunity from them to diversify, but I believe this is going to help them having a wider view on the portfolio and globally.

Q: How does this tie in with in your eyes with other products related to global markets like the Han Seng Bees which Benchmark Asset management is introducing? There are some global products which you can participate in today.

Bansal: We have seen some amount of global fund offering being packaged in the local fund mode but these products allow the investors to directly take a view on the global markets particularly the frontline global markets. This is going to make them quite at the ease without having much of charges associated with it. So this is one alternative to the current options they have.

Right now the options investors have is that they are using is 200,000 route for remittance overseas to consider the potential investment outside and also some of the funds which are offering global linkages. This is going to be an additional offering to them and a quite connecting with them in the sense that they are anyways dealing with the Indian market and they are able to deal with in a similar manner on the global indices. Hence, it's going to be a great opportunity for them to diversify their portfolios.

Q: Which one seems more exciting as a product, the Dow and the S&P being listed here or the Nifty being listed overseas?

Shah: We believe both. Let's take the example of the Nifty being traded across the world. Until now everyone says in the morning, I looked at the Dow, the S&P and what all has happened in Japan and Hong Kong and seeing what's going to happen in the Indian markets. Now atleast you will have Indian markets atleast traded outside. You will know exactly overnight what is happening with the Indian stocks and the Indian index atleast. So the amount of people who would start trading India would be immense and there are a lot of retail investors in the US who can't even trade India. So it's very positive.

On the flip side of it, Indians didn't have ever a chance to invest in international markets and that has been our philosophy of our funds. Investors should have an ability to invest in whatever asset class they believe in be it gold or being commodities also. We believe as many international indices available for the Indian investors, it helps them diversify. Indian investors basically had a home bias. Our companies go and invest in international markets. We cheer the fact that basically they are investing you in the international markets and doing so well why shouldn't our investors do that.