BSE to introduce derivatives trading in NASDAQ 100 index

Ahmedabad, Sep 15 (PTI) Country''s oldest stock exchange BSE today said it plans to introduce trading in derivatives linked to NASDAQ, which will help domestic investors have exposure to global equity markets.

"We have applied for NASDAQ 100 index options and few other indices to begin with. The talks are at an advanced stage. Once the approval comes, we shall start trading in it," BSE Deputy CEO Ashishkumar Chauhan told PTI.

Chauhan was here to announce the launch of BSE''s Liquidity Enhancement Incentive Programme, with focus on derivatives on the bellwether index Sensex and its underlying 30 stocks.

"The idea is to introduce various assets class to the investors and whatever gets attraction, we will work on that," he said.

BSE has applied to market regulator Security and Exchange Board of India (SEBI) seeking permission to start trading on options in NASDAQ 100 index and few other foreign indices.

He, however, stated that "it is not still very clear what is the appetite for foreign asset class or indices in India".

"Couple of years back, investment of USD 200,000 a year was allowed in foreign indices but not much interest was noticed," Chauhan said.

"India is a growth market, so once people have the facility to diversify to asset classes to whom they are not directly connected, they would participate, especially when its available on a local exchange," Chauhan said.

The National Stock Exchange had last month launched derivative contracts linked to the American equity indices -- Dow Jones Industrial Average (DJIA) and S&P 500. It marked the first such type of contracts on global indices to be launched in India.

Meanwhile, speaking about the Liquidity Enhancement Incentive Programme (LEIP), Anil Shah, a member of BSE governing board, said "The scheme is expected to increase derivative turnover of the exchange from existing around Rs 100 crore per day to over Rs 35,000 crore per day within 15 days of its launch in October."

"We expect atleast 25 to 30% participation in this scheme from Gujarat," Shah said.

"Over 100 members have shown commitment so far to participate in this scheme, and another 400 are expected to join gradually as we move ahead," he said.

BSE will pay incentives worth Rs 5 crore in the first phase of the two-tier series of LEIPS-I (Beta) to participating members.

In the second phase of the programme (or series LEIPS-II), incentives to the tune of Rs 102 crore (Rs 17 crore on a monthly basis) would be paid out to all participating members.

The LEIPS-I (Beta) will run from September 28-October 25, 2011 and LEIPS-II will commence on October 26 and run for six months.