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India Options Mart To Get Boost

14 Feb 2006

The Indian derivatives market is expected to get a boost in turnover due to an increase in limits for single-stock futures and options. The Securities and Exchange Board of India has raised the position limits from a combined INR500 million (USD11.3 million) for futures and options to a combined amount of 20% of physical capital of a company.

"It's a logical next step," said Justin Kennedy, managing director in Asia-Pacific equity derivatives at Citigroup in Hong Kong. "This gives investors an effective means to trade single-stock optionality onshore." In addition to direct trading by qualified institutional investors, international houses offer such derivative positions to offshore accounts via market access participatory notes, which have become a massive business in the last few years.

"We've watched index volumes increase substantially and thought it was time to increase the limits on single stock contracts," said N. Parakh, chief general manager in the derivatives department and author of the circular at SEBI in Mumbai. "This should allow for the development of a meaningful single-stock options market," added Kennedy.
14 Feb 2006