NSE set to offer more products for derivatives, awaiting Sebi’s nod

MUMBAI: Punters may get a new product to bet on in the derivatives segment if the capital market regulator gives the National Stock Exchange the nod to launch derivatives on the CNX Dividend Opportunities index and CNX Low Volatility index, a Sebi official told ET.

However, he added, that stock exchanges should first create awareness about any derivative product they intend to launch as the retail investors may find it complex.
“A greater number of derivative products could create confusion for retail investors and the thrust should be on financial inclusion with high investment products,” said the Sebi official, but added that the regulator was studying NSE’s proposal.

Known as strategy indices, the products NSE has sought approval to track the performance of an algorithmic trading strategy and specify actions that need to be taken.

NSE says the Dividend Opportunities Index was designed to provide exposure to high-yielding companies along with price stability and volume depth. As the name suggests, the CNX Low Volatility index aims to measure performance of the least volatile stocks on NSE.

The reservations of Sebi stem from the fact that there has been a thrust on derivative trading and cash market volumes have seen a sharp fall. Around 80%-85% of Equity Trading in India is concentrated in derivatives.

Source: By Palak Shah, ET Bureau

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