NSE launches Dow Jones, S&P 500 futures from Aug 29

Business

oi-Monika Nihalani

By Monika Nihalani

Published: Friday, August 26, 2011, 12:53 [IST]

The National Stock Exchange (NSE) announces the launch of derivative contracts on benchmark US indices Dow Jones Industrial Average (DJIA) and S&P 500 from Monday (August 29, 2011). Indian Investors will now be able to take an exposure in the world's largest stock markets on the NSE.

"The NSE is launching derivative contracts on the world's most followed equity indices, the S&P 500 and the Dow Jones Industrial Average from August 29," it said in a statement.

This is the first time, Indian Index has launched the global derivative contracts in India.

Important highlights of the move:

The new contracts will include futures on both the DJIA and the S&P 500 and options on S&P-500.

The new contracts will be rupee-denominated.

Indian investors can trade during Indian trading hours.

Trading in derivatives on the global indices is restricted to Indian residents only, which means foreign institutional investors and non-resident Indians can not participate on this trade.

In order to encourage participation in global F&O contracts, NSE has decided not to levy transaction charges on them till February 29, 2012.

NSE would launch four quarterly futures contracts on S&P 500 and DJIA expiring in March, June, September and December. The expiry date for these contracts will be the third Friday of the respective contract month.

The exchange is planning to launch mock trading on Saturday (August 27, 2011).

NSE said it had received market regulator Sebi's approval to launch derivative contracts on these two US indices. Sebi had released the regulatory framework for such products in January.

In its circular, Sebi has clarified that after the introduction of derivatives on a particular stock index, if it fails to meet any of the eligibility criteria for three months consecutively, no fresh contract shall be introduced on that index.

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